NATIONALUM - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 19 Sept 25, 2:16 pm

Fundamental Rating: 4.6

📊 Core Financials Overview

Profitability

PAT this quarter: ₹1,064 Cr vs ₹2,078 Cr — a 77% drop, but still robust in absolute terms.

EPS: ₹31.5 — strong earnings base.

Return Metrics

ROCE: 43.7% and ROE: 32.6% — exceptional, indicating superior capital efficiency and shareholder value creation.

Debt Profile

Debt-to-equity: 0.01 — virtually debt-free, enhancing financial resilience.

Cash Flow: Strong, supported by integrated operations and high-margin production.

💹 Valuation Indicators

Metric Value Commentary

P/E Ratio 6.79 Deeply undervalued vs. industry average of 20.4 — strong value signal.

P/B Ratio ~2.18 Reasonable given high ROE.

PEG Ratio 0.31 Attractive — suggests undervaluation relative to growth.

Intrinsic Value Estimated near ₹240–₹250 Current price of ₹214 is ~10–15% below fair value — favorable entry point.

🧠 Business Model & Competitive Advantage

National Aluminium Company Ltd. (NALCO) is a vertically integrated PSU operating across the entire aluminium value chain

Core Operations

Bauxite mining → Alumina refining → Aluminium smelting → Power generation.

Products include ingots, billets, wire rods, alumina hydrate, and specialty alumina.

Strategic Strengths

Captive bauxite mines in Odisha ensure raw material security.

Own power plants reduce energy costs — a major advantage in aluminium production.

Export Reach

Significant international sales, contributing to India’s forex earnings.

Efficiency & Scale

Gross margin ~69%, net margin ~31%

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Operates in a high-barrier industry with few large players

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NALCO’s competitive edge lies in cost leadership, vertical integration, and government backing, making it resilient even during commodity downturns.

📈 Technical & Sentiment Signals

RSI: 64.8 — approaching overbought zone, short-term caution.

MACD: Positive — bullish momentum.

Volume: Below weekly average — suggests mild consolidation.

DMA 50/200: Price above both — confirms long-term uptrend.

🎯 Entry Zone & Long-Term Guidance

Suggested Entry Zone: ₹195–₹210 — near DMA levels and below RSI peak.

Long-Term View: NATIONALUM is a high-quality PSU with strong fundamentals, low debt, and attractive valuation. Ideal for long-term holding, especially for investors seeking exposure to industrial metals and dividend income (4.91% yield). Its strategic integration and cost advantage make it a durable play in the aluminium sector.

You can explore NALCO’s full stock analysis

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or its economic moat breakdown

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for deeper insights. Let me know if you'd like a comparison with Hindalco or Vedanta.

1

www.tipranks.com

2

www.alphaspread.com

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