NLCINDIA - Fundamental Analysis: Financial Health & Valuation

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

Fundamental Rating: 3.9

NLC India shows solid profitability and valuation metrics, with a promising transition toward renewable energy. While growth is accelerating, margin pressure and moderate return ratios temper the outlook.

📊 Financial Overview

• Profitability: PAT rose to ₹485 Cr from ₹368 Cr — 43% QoQ growth
• Margins: ROCE at 9.02%, ROE at 5.61% — modest efficiency
• Debt Profile: Debt-to-equity ratio of 0.47 — moderate leverage
• EPS: ₹13.8 — supports valuation
• Dividend Yield: 1.14% — consistent income return

📈 Valuation Metrics

• P/E Ratio: 18.9 — below industry average of 30.9
• P/B Ratio: ~2.0 — reasonable given book value ₹131
• PEG Ratio: 61.1 — unusually high due to low historical growth base
• Intrinsic Value: Estimated around ₹250–₹270 based on earnings and sector multiples

🏢 Business Model & Competitive Edge

• Core Operations: NLC India is a government-owned power generation and mining company focused on lignite, coal-based thermal, and renewable energy
• Moat: Strong asset base, government contracts, and strategic role in energy transition
• Growth Drivers: Expansion into solar and wind, 3x capacity target to 18.5 GW, and mining efficiency

📌 Entry Zone Recommendation

• Suggested Entry: ₹245–₹255 — near DMA200 and intrinsic value
• Technical Indicators: RSI at 48.2 (neutral), MACD negative — short-term weakness

📈 Long-Term Holding Guidance

• Hold for long-term if accumulated near support; monitor renewable capacity additions and margin trends
• Attractive for value investors with moderate risk appetite

✅ Positive

• Strong PAT growth and improving operational scale
• FII holding increased by 0.30%
• Strategic pivot toward renewables and 3x capacity expansion plan

⚠️ Limitation

• Low ROE and ROCE compared to peers
• High PEG ratio due to base effect
• DII holding declined by 0.39%

📰 Company Negative News

• Stock declined 3.13% post Q2 FY26 results due to margin concerns despite profit growth

  MarketsMojo.com

🌟 Company Positive News

• Q2 FY26 PAT up 65.49% QoQ; strong performance in thermal and mining segments

  MarketsMojo.com

• Targeting 18.5 GW capacity with aggressive renewable expansion

  JM Financial Services

🏭 Industry

• Power generation industry P/E at 30.9 — NLC trades at a discount
• Sector driven by energy transition, infrastructure investment, and policy support

🧾 Conclusion

• NLC India is a stable PSU with improving profitability and a bold renewable roadmap
• Accumulate near support zones for long-term gains; monitor execution and margin trends

Sources

JM Financial Services

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