Motilal Oswal's research report on Nalco
NALCO's 1QFY22 result was below our expectations due to higher than expected costs and miss on volumes/realization. EBITDA/adjusted PAT declined by 38%/45% QoQ to INR8.9b/INR3.5b and missed our estimate by 34%/38%. We lower our FY22E EBITDA estimate by 10% to factor in higher costs. However, we raise our FY23E EBITDA estimate by 15% as we revise upwards our FY23E LME aluminum assumption by 7% to USD2,300/t. We maintain our Buy rating.
Outlook
We value the stock on a SoTP basis at 5x FY23E EV/EBITDA and at 0.75x book value for growth CWIP to arrive at our TP of INR107. At the CMP, it provides an attractive dividend yield of ~5%. We maintain our Buy rating.
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