"The company will gain from operating leverage in aluminium. We feel investors could buy the stock with target price of Rs 100," says Sumit Bilgaiyan, Founder of Equity99.
Sumit Bilgaiyan
National Aluminium Company is a fully integrated producer of alumina and aluminium. Aluminum contributes 67 percent, alumina 32 percent and power 1 percent to its revenue.
NALCO is lowest cost producer of alumina globally, supported by captivebauxite mines at Panchpatmali in Odissa with an estimated reserve of 160 MT.
We remain positive on NALCO, given its long alumina position and integrated business model with captive bauxite mines and coal linkages in place and the high dividend yield. Price rise in base metal could help to generate more revenue and margins.
It's profitability would remain largely intact on the back of low cost of production due to its high grade captive bauxite mine. With expectation of better revenue growth, higher margin and consistency of dividend/buyback payout, we are optimistic on the stock.
NALCO’s share price is correlated with alumina/aluminium prices to a large extent. The company will gain from operating leverage in aluminium. We feel investors could buy the stock with target price of Rs 100.
Disclaimer: The author is Founder, Equity99. The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.