While most of the public sector stocks tend to slip in and out as per the market conditions, National Aluminium Company Limited (NALCO) has shifted firmly back into focus. The aluminium producer has staged one of its strongest rallies in recent years and is now prompting investors to reassess its long-term potential.
Even after delivering close to an 88 per cent return this financial year, the stock still appears reasonably valued and supported by sturdier fundamentals than in previous cycles. This has led to the inevitable question: Is there room left to add it at current levels?
On Thursday, the company’s shares closed at INR 269.20 (USD 3.00), a 1.01 per cent rise over the previous session’s INR 266.50 ( USD 2.96), taking its market capitalisation to INR 49,442.13 crore (USD 5.49 billion).
Stock performance reveals renewed interest
NALCO has undergone a notable re-rating. From its price of INR175.29 ( USD 1.95) on 1 April 2025, the stock has moved to INR 268.7 (USD 2.99), delivering a 53.23 per cent gain. The climb appears even more dramatic when compared to the year’s low of INR143.22 (USD 1.59), recorded on 11 April 2025, from which it has appreciated by 87.54 per cent. The numbers underline consistent buying interest and strong momentum through the year.
The company registered its strongest ever performance in both Q2 FY26 and H1 FY26. Revenue in the September quarter rose 7 per cent year-on-year, but the most meaningful improvement came from volumes. Alumina sales surged 39 per cent to 396 kilotonnes, driven by steady export orders and higher domestic consumption. Lower power costs, thanks to increased use of captive coal, boosted margins, making the quarter one of the most profitable in NALCO’s history.
Also read: NALCO’s profit soars 35%, backed by strong production and robust market demand
Cost structure is turning more competitive
NALCO’s reliance on captive coal is now a defining advantage. With nearly 57 per cent of fuel needs expected to be met internally, the company’s dependence on external energy sources is falling, helping pull down production costs. Despite alumina prices fluctuating in the USD 320–340 per tonne range, profitability has remained firm because of this stable cost base. As a result, earnings now look more resilient even during softer commodity cycles.
Growth projects that could shift future scale
The company’s expansion roadmap is well underway. Its one-million-tonne alumina refinery, almost 80 per cent complete, will eventually have total refining capacity from 2.1 million tonnes to 3.1 million tonnes by FY27.
A second major development is planned for the next growth phase: a 0.5-million-tonne aluminium smelter paired with a 1,080 MW captive power plant. This package of projects, expected to be commissioned around 2030, represents about INR 30,000 crore (USD 3.33 billion) in capital outlay. With more than INR 8,000 crore (USD 0.89 billion) in cash reserves and steady cash generation, NALCO is positioned to undertake the build-out without straining its balance sheet.
Also read: NALCO surges 3.03% as strong revenue and net profit drive market momentum
Valuation leaves room for comfort
Despite its sharp rally, the stock trades at around 8.15 times earnings and roughly 4.5 times EV/EBITDA. These levels remain inexpensive relative to companies with similar profitability profiles. Its dividend yield, at about 4.5 per cent, adds an additional layer of appeal for investors who prefer stable payouts while waiting for the next re-rating. While near-term metal price volatility has been priced in to some extent, the longer-term benefits from higher capacity and lower costs appear far less reflected.
Company profile and financial outlook
NALCO, headquartered in Bhubaneswar, supplies alumina and aluminium to both domestic and overseas markets through its Chemical and Aluminium divisions, producing everything from ingots, billets and wire rods to rolled and chequered sheets, calcined alumina, alumina hydrate, speciality alumina and zeolite-A. The company runs an integrated set-up that covers coal and bauxite mining, alumina refining, aluminium smelting and captive power generation, alongside wind and solar projects in Andhra Pradesh, Rajasthan, Maharashtra and Odisha. Its operations are supported by mechanised export and import facilities for alumina and caustic soda.
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Founded in 1981, NALCO has grown into a fully integrated aluminium producer with strong control over resources and energy. In Q2 FY26, the firm posted revenue of INR 4,292 crore (USD 476.9 million), a rise of 7.27 per cent year-on-year and 12.74 per cent over the previous quarter. EBITDA reached INR 2,077 crore ( USD 230.78 million), up 28.13 per cent from a year earlier and 28.54 per cent quarter-on-quarter, while net profit climbed to INR 1,433 crore (USD 159.22 million), an increase of 34.94 per cent year-on-year and 34.66 per cent sequentially. Over the last five years, NALCO has delivered a 15 per cent revenue CAGR, 108 per cent profit CAGR and a 45 per cent stock price CAGR, with an ROE of 32.7 per cent and ROCE of 44 per cent, reflecting robust performance across its business.
Resilient NALCO attracts investor interest
NALCO is gradually moving beyond its old image as a cyclical metal stock. A more efficient cost structure, upcoming capacity expansions, solid cash reserves and stable profitability are reshaping it into a lower-cost and more competitive producer. While commodity prices will continue to influence near-term earnings, the company now has clearer visibility on margins and growth. For investors evaluating long-term opportunities, NALCO’s improving fundamentals may warrant closer consideration relative to individual risk preferences.
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