NATIONALUM - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 20 Dec 25, 11:16 pm

Fundamental Rating: 4.6

📊 Financials: National Aluminium (NALCO) demonstrates excellent fundamentals with ROE at 32.6% and ROCE at 43.7%, reflecting strong efficiency and profitability. Debt-to-equity ratio is 0.00, indicating a debt-free balance sheet. EPS stands at ₹33.5, supported by quarterly PAT growth from ₹1,064 Cr. to ₹1,433 Cr. (+34.9%). Dividend yield of 3.76% adds consistent income support.

💹 Valuation: Current P/E of 8.38 is significantly below industry average of 20.6, suggesting undervaluation. Book value of ₹109 gives a P/B ratio of ~2.56, reasonable given strong profitability. PEG ratio of 0.39 indicates attractive growth-adjusted valuation. Intrinsic value appears higher than current price, offering a strong margin of safety.

🏭 Business Model: NALCO operates in aluminium production and mining, benefiting from global demand for metals and government support. Its competitive advantage lies in being debt-free, cost-efficient, and strategically positioned in the metals sector.

📈 Entry Zone: Current price ₹279 is near its 52-week high of ₹283. Entry zone recommended between ₹250–270 for accumulation. Long-term holding is favorable given strong fundamentals, dividend support, and sectoral demand.

Positive

• 📌 Strong ROCE (43.7%) and ROE (32.6%) indicate excellent efficiency
• 📌 Debt-free balance sheet (Debt-to-equity 0.00)
• 📌 Attractive dividend yield (3.76%) provides steady income
• 📌 P/E of 8.38 well below industry average (20.6), showing undervaluation
• 📌 Quarterly PAT growth (+34.9%) highlights strong performance
• 📌 52-week index gain of 97.2% reflects strong momentum

Limitation

• ⚠️ Current price near 52-week high (₹283), limiting immediate upside
• ⚠️ RSI at 68.6 indicates overbought momentum
• ⚠️ P/B ratio (~2.56) slightly elevated compared to book value

Company Negative News

• 📉 Decline in DII holding (-0.31%) reflects reduced domestic institutional confidence
• 📉 Price momentum may face resistance near 52-week high

Company Positive News

• 📈 Increase in FII holding (+1.16%) shows strong foreign investor confidence
• 📈 PAT surged from ₹1,064 Cr. to ₹1,433 Cr.
• 📈 Debt-free status enhances financial flexibility

Industry

• 🏭 Aluminium and metals sector supported by global demand and infrastructure growth
• 🏭 Industry P/E at 20.6 highlights NALCO’s undervaluation compared to peers

Conclusion

✅ National Aluminium is fundamentally strong with high efficiency, debt-free balance sheet, and undervaluation relative to peers. Entry around ₹250–270 offers margin of safety. Long-term holding is recommended, especially for investors seeking dividend income and exposure to the metals sector.

Would you like me to extend this into a peer benchmarking overlay comparing NALCO with other aluminium producers, or a basket scan to identify compounding opportunities across the metals and mining sector?