NATIONALUM - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 05 Nov 25, 7:43 am

Fundamental Rating: 4.5

📊 Financial Overview

• Profitability: PAT at ₹1,064 Cr, down from ₹2,078 Cr QoQ; EPS at ₹31.5
• Margins: ROCE at 43.7%, ROE at 32.6% — exceptional capital efficiency
• Debt Profile: Debt-to-equity ratio of 0.01 — virtually debt-free
• Dividend Yield: 4.48% — highly attractive for income-focused investors

📈 Valuation Metrics

• P/E Ratio: 7.42 — significantly below industry average of 19.8
• P/B Ratio: ~2.38 — reasonable given book value ₹98.2
• PEG Ratio: 0.34 — indicates undervaluation relative to growth
• Intrinsic Value: Estimated around ₹250–₹270 based on earnings and sector multiples

🏢 Business Model & Competitive Edge

• Core Operations: National Aluminium Company Ltd (NALCO) is a Navratna PSU engaged in bauxite mining, alumina refining, and aluminium smelting
• Moat: Integrated operations, government backing, and cost-efficient production
• Growth Drivers: Global aluminium demand, export opportunities, and renewable energy integration

📌 Entry Zone Recommendation

• Suggested Entry: ₹215–₹225 — near DMA50 and below intrinsic value
• Technical Indicators: RSI at 63.9 (approaching overbought), MACD strong — bullish momentum

📈 Long-Term Holding Guidance

• Hold for long-term if accumulated near support; ideal for value and dividend investors
• Monitor global aluminium prices and export volumes

✅ Positive

• Exceptional ROCE and ROE
• Low P/E and PEG ratios
• Strong dividend yield
• FII holding increased by 1.16%

⚠️ Limitation

• QoQ PAT decline from ₹2,078 Cr to ₹1,064 Cr
• DII holding declined by 0.31%
• RSI nearing overbought zone

📰 Company Negative News

• Q2 FY26 PAT dropped 48.8% QoQ due to lower aluminium realizations and higher input costs

🌟 Company Positive News

• Strong export performance and cost optimization helped maintain margins despite revenue pressure
• Rated among top PSU picks for FY26 by multiple brokerages

🏭 Industry

• Metals and mining industry P/E at 19.8 — NALCO trades at a discount
• Sector driven by infrastructure growth, global commodity cycles, and energy transition

🧾 Conclusion

• NALCO is a fundamentally strong PSU with high profitability, low valuation, and consistent dividends
• Accumulate near support zones for long-term value and income; monitor commodity trends and export performance