26 AUGUST 2011Business Standard
Nalco's prospects hinge on price stability
Edited by : AL CIRCLE
1 min read
Nalco Profits will take a hit if aluminium prices fall significantly.
The recent news about National Aluminium Company (Nalco) receiving approval to mine coal in its Orissa block saw the stock rise almost 16 per cent from a 52-week low on Friday (August 19). Though it has given up some ground thereafter, the development is positive and improves the company’s coal security for future expansion projects, besides cost savings.
Since early 2011, Coal India had raised prices by a little over 30 per cent, which had led analysts to significantly downgrade Nalco’s earnings for 2011-12, as well as 2012-13. The move was logical, as the company procures almost 90 per cent of its requirement (used in generating power, for producing aluminium) from entities like Coal India. The approval to mine coal, hence, signals that things should change for the better.
The recent news about National Aluminium Company (Nalco) receiving approval to mine coal in its Orissa block saw the stock rise almost 16 per cent from a 52-week low on Friday (August 19). Though it has given up some ground thereafter, the development is positive and improves the company’s coal security for future expansion projects, besides cost savings.
Since early 2011, Coal India had raised prices by a little over 30 per cent, which had led analysts to significantly downgrade Nalco’s earnings for 2011-12, as well as 2012-13. The move was logical, as the company procures almost 90 per cent of its requirement (used in generating power, for producing aluminium) from entities like Coal India. The approval to mine coal, hence, signals that things should change for the better.
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