This PSU metal stock has zoomed 170% in one year; trades at new high

NALCO shares continued their upward movement hitting a new high at Rs 252.65, up 5% in intra-day trades and have surged 15% in the past 3 days after China said it would cancel export tax rebates.

Shares of National Aluminium Company (NALCO) continued their upward movement and hit a new high at Rs 252.65 - up 5 per cent on the BSE in Thursday’s intra-day trade in an otherwise weak market. In the past three days, the stock of the metal company has surged 15 per cent after China said it would cancel export tax rebates. In comparison, the BSE Sensex was down 0.53 per cent at 77,167 at 12:03 pm.

 

In the last one year, the market price of state-owned NALCO has zoomed 170 per cent, as against 17 per cent rise in the BSE Sensex. NALCO is a Navaratna Central Public Sector Enterprise (CPSE) under Ministry of Mines, Government of India (GOI). As on September 2024, the GOI held 51.28 per cent stake in the company, the shareholding pattern data shows.

 

 

As per media sources, China will be cancelling export tax rebates for aluminium and copper products, which will be effective from December 1, 2024. This led to a surge in LME aluminium prices by 8 per cent, reaching $2,730 per tonne.

 

According to ICICI Securities, this development is likely to curtail China’s aluminium exports, thereby tightening global supply and driving up prices. Consequently, this is a favourable development for Indian aluminium companies such as NALCO, it added.

 

Meanwhile, since April, thus far in the financial year 2024-25, the stock has zoomed 65 per cent. NALCO posted a robust performance in the first half of the current financial year with a 199 percent rise in net profit that soared to Rs 1,663 crore, compared to Rs 556 crore for the corresponding period of the previous year. It has achieved its best-ever performance in domestic metal sales for H1FY25, recording the highest cumulative domestic metal sales of 221,966 MT during the period.

 

NALCO is one of the largest producer of bauxite, alumina and aluminum in India with production of 0.46mt/2.12 mt for aluminium/alumina in FY24. The export sales volume of alumina stood at 1.17mt in FY24. NALCO’s expansion of its alumina refinery, rising alumina prices, and cost-saving through captive coal mining are expected to drive earnings growth, according to JM Financial Services. The brokerage firm has a target price of Rs 264 per share over the next 6-12 months.

 

ICRA has estimated that the domestic aluminium demand growth to remain healthy at 9 percent annually through the financial year 2023-24 and the financial year 2024-25. This growth is driven by several factors including the Indian government massive infrastructure development plans, growing urbanization levels and initiatives like housing for all schemes, as well as investment in the metro rail network and aluminium-bodied Vande Bharat trains.

 

The power transmission and distribution sector is a major consumer of aluminium in India. With the Central Electricity Authority planning a substantial expansion of capacity. In addition, the Government of India’s ambitious target to achieve 500 GW of renewable energy capacity by 2032, would require significant capacity addition for the transmission lines in the coming decade. Further, an improvement in the solar rooftop installation market along with large capacity additions expected in the solar module manufacturing in India in the next 3-4 financial years, would also drive domestic aluminium demand as a part of the renewable energy transition drive, NALCO said in its FY24 annual report.