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NALCO gets a neutral rating
Edited by : AL CIRCLE
2 min read
Motilal Oswal has maintained neutral rating on NALCO with a target of Rs 42, in its January 31, 2013 research report.
“Nalco reported EBITDA of INR1.8b, above our estimate of INR980m, as the impact of mine closure on alumina production was lower-than-expected. Adjusted PAT increased to 132% YoY to INR1.2b. Net sales increased 5% QoQ (+17% YoY) to INR16.9b on higher aluminum realization, improved spot premiums and higher alumina sales. Aluminum sales declined 1% QoQ to 100kt, while alumina sales improved 16% QoQ to 221kt. Aluminum production declined 2% QoQ (+7% YoY) to 100kt. Panchpatmali bauxite mining licence expired in November 2012. Nalco restarted operations in December as it has received temporary one year extension to operate the mine.”
“Aluminum realization increased 3% QoQ to INR127,630/t (USD2,357/t), while alumina realization declined 1% QoQ to INR17,773/t (USD327/t). Aluminum realization was supported by higher product premium of 17.2% in 3QFY13, against 16% in 2QFY13. Segmental EBIT of aluminum (full integration basis) improved from a loss of INR681m in 2QFY13 to INR364m in 3QFY13. Segmental EBIT (external sales) of alumina improved from a loss of INR20m in 2QFY13 to INR828m in 3QFY13. According to our calculation, the CoP of metal decreased 5% QoQ to INR124,000 (USD2,290/t). We are building production growth of 5% and 13% in alumina and aluminum over FY13E-15E on improved capacity utilization. EPS is expected to increase 62% over FY13E-15E to INR3.4/share. However, stock still trades at rich FY15E PE of 15.1x and EV/EBITDA of 6.7x. We value the stock at INR42/share based on EV/EBITDA of 5x FY15E. Maintain Neutral,” says Motilal Oswal research report.
“Nalco reported EBITDA of INR1.8b, above our estimate of INR980m, as the impact of mine closure on alumina production was lower-than-expected. Adjusted PAT increased to 132% YoY to INR1.2b. Net sales increased 5% QoQ (+17% YoY) to INR16.9b on higher aluminum realization, improved spot premiums and higher alumina sales. Aluminum sales declined 1% QoQ to 100kt, while alumina sales improved 16% QoQ to 221kt. Aluminum production declined 2% QoQ (+7% YoY) to 100kt. Panchpatmali bauxite mining licence expired in November 2012. Nalco restarted operations in December as it has received temporary one year extension to operate the mine.”
“Aluminum realization increased 3% QoQ to INR127,630/t (USD2,357/t), while alumina realization declined 1% QoQ to INR17,773/t (USD327/t). Aluminum realization was supported by higher product premium of 17.2% in 3QFY13, against 16% in 2QFY13. Segmental EBIT of aluminum (full integration basis) improved from a loss of INR681m in 2QFY13 to INR364m in 3QFY13. Segmental EBIT (external sales) of alumina improved from a loss of INR20m in 2QFY13 to INR828m in 3QFY13. According to our calculation, the CoP of metal decreased 5% QoQ to INR124,000 (USD2,290/t). We are building production growth of 5% and 13% in alumina and aluminum over FY13E-15E on improved capacity utilization. EPS is expected to increase 62% over FY13E-15E to INR3.4/share. However, stock still trades at rich FY15E PE of 15.1x and EV/EBITDA of 6.7x. We value the stock at INR42/share based on EV/EBITDA of 5x FY15E. Maintain Neutral,” says Motilal Oswal research report.
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