Introduction:
Shares of National Aluminium Company (NALCO), a leading kingdom-owned aluminium producer, were on a fantastic upward trajectory, hitting a new excessive of Rs 252.65 on Thursday, marking a five% surge within the stock price throughout intra-day trading. This increase comes regardless of a weak broader marketplace, wherein the BSE Sensex dropped with the aid of 0.Fifty three% round noon.
In the past three days alone, NALCO’s stock price has skyrocketed by 15%, following news that China plans to cancel its export tax rebates on aluminium and copper products, effective December 1, 2024. This move has led to a sharp 8% spike in London Metal Exchange (LME) aluminium prices, which are now trading at $2,730 per tonne.
Analysts suggest that this change could significantly reduce China’s aluminium exports, tightening the global supply, and, in turn, benefiting Indian aluminium players like NALCO.
Stellar Performance Amidst Market Volatility
NALCO’s performance over the past year has been exceptional, with the company’s stock surging 170%, far outpacing the 17% gain seen in the BSE Sensex over the same period. For the current fiscal year, the state-owned company’s stock has risen by 65%, reflecting strong growth and investor confidence.
NALCO’s robust performance is further evidenced by its H1FY25 results, where the company reported a massive 199% increase in net profit, which soared to Rs 1,663 crore, up from Rs 556 crore in H1FY24. Additionally, NALCO achieved its highest-ever domestic metal sales of 221,966 MT during the first half of FY25, underscoring the company’s strong market position.
NALCO Stock Soars 170% in One Year: A Deep Dive into Its Impressive Growth and Future Outlook:
Favorable Global and Domestic Trends
Several factors are contributing to NALCO’s success, both globally and domestically. On the global front, China’s move to scrap its export tax rebates is seen as a positive development for Indian aluminium producers. This is expected to reduce global aluminium availability and drive up prices, which benefits NALCO, a key player in the sector.
Analyst Outlook
Brokerage firm JM Financial Services has set a target price of Rs 264 per share for NALCO over the next 6-12 months, indicating a continued strong outlook for the company. ICICI Securities also highlights that NALCO stands to benefit from tightening global aluminium supplies and rising prices.
Conclusion
NALCO’s surge in stock price and solid financial performance reflect its strong position in the Indian and global aluminium markets. With favorable global developments like China’s export tax rebate cancellation,
combined with robust domestic demand driven by government infrastructure initiatives, NALCO appears well-poised for continued growth. As a key player in India’s aluminium industry, it remains a compelling investment in the face of strong sectoral tailwinds.
Frequently Asked Questions FAQ:
1. What is National Aluminium Company (NALCO)?
National Aluminium Company (NALCO) is a Navratna public sector enterprise (CPSE) under the Ministry of Mines, Government of India. It is one of the largest producers of bauxite, alumina, and aluminium in India. NALCO plays a critical role in the Indian aluminium industry with significant production and export volumes of alumina and aluminium products.
2. Why has NALCO’s stock price surged 170% in the past year?
NALCO’s stock has surged due to several factors, including:
- Strong financial performance, with a 199% increase in net profit for H1FY25.
- Global supply constraints, as China announced the cancellation of export tax rebates for aluminium and copper, which has pushed aluminium prices higher on the global market.
- Domestic growth, driven by India’s massive infrastructure and renewable energy projects, which are expected to increase the demand for aluminium.
3. What recent developments have impacted NALCO’s stock?
A key development that has positively impacted NALCO’s stock is China’s decision to cancel export tax rebates on aluminium and copper products effective from December 1, 2024. This move has created a tighter global aluminium supply, which has pushed prices higher, benefitting Indian companies like NALCO.
4. How did NALCO perform in the first half of FY25?
NALCO reported a 199% rise in net profit, which increased to Rs 1,663 crore in the first half of FY25, compared to Rs 556 crore in the same period the previous year. Additionally, the company recorded its highest-ever domestic metal sales at 221,966 MT during H1FY25.
5. What is NALCO’s future outlook?
NALCO’s future outlook remains positive due to:
- Strong domestic demand for aluminium, driven by government initiatives like housing for all, metro rail expansions, and renewable energy projects.
- Increased aluminium prices due to global supply constraints.
- Capacity expansions in NALCO’s alumina refinery and cost-saving measures such as captive coal mining.
Analysts forecast continued strong earnings growth, with firms like JM Financial Services setting a target price of Rs 264 per share over the next 6-12 months.
6. What are the key factors driving the demand for aluminium in India?
Aluminium demand in India is expected to grow significantly due to:
- Massive infrastructure development, including metro rail projects and housing schemes.
- Government initiatives, such as the push for renewable energy and the 500 GW renewable energy target by 2032.
- Aluminium’s role in power transmission, where it is heavily used for electrical cables and distribution lines.
- Growth in solar energy, where aluminium is a critical component in solar modules and installations.
7. How does NALCO benefit from rising aluminium prices?
As aluminium prices rise globally, NALCO benefits from higher revenues on its aluminium and alumina exports. Additionally, the company is positioned to take advantage of the tightened global supply following China’s tax rebate cancellation, which is likely to reduce competition and push prices even higher.
8. What is the government’s role in NALCO’s growth?
The Government of India is a major shareholder in NALCO, holding a 51.28% stake in the company as of September 2024. NALCO’s growth is also supported by government policies aimed at boosting infrastructure, renewable energy, and the manufacturing sector, which drive demand for aluminium products.
9. What is the target price for NALCO’s stock in the next 6-12 months?
JM Financial Services has set a target price of Rs 264 per share for NALCO over the next 6-12 months, reflecting the company’s strong growth potential driven by market conditions and domestic demand.
10. Is NALCO a good investment?
NALCO has shown impressive stock price growth and strong financial results. With a favorable market outlook, rising aluminium prices, and domestic demand drivers, many analysts consider NALCO a strong investment opportunity, particularly in the metals and mining sector. However, investors should always assess their risk tolerance and consult with a financial advisor before making investment decisions.
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