Global Materials | Industrials | Commodities

Rahul Jain

Equity Bottom-Up

<ul>
<li>Record margins sustained: Q2 FY26 EBITDA ₹1,932 cr; full-year margins near 49% on captive coal and lower caustic costs.</li>
<li>Growth visibility: 1 Mtpa 5th-stream alumina refinery to commission by Jun 2026; Pottangi mine start by FY27.</li>
<li>Valuation gap: Trades at ~4× EV/EBITDA vs 6–7× peers, with ₹7,900 cr cash and 4.5% yield supporting 25–30% re-rating potential.</li>
</ul>


Record margins sustained: Q2 FY26 EBITDA ₹1,932 cr; full-year margins near 49% on captive coal and lower caustic costs.
Growth visibility: 1 Mtpa 5th-stream alumina refinery to commission by Jun 2026; Pottangi mine start by FY27.
Valuation gap: Trades at ~4× EV/EBITDA vs 6–7× peers, with ₹7,900 cr cash and 4.5% yield supporting 25–30% re-rating potential.


NALCO — Margin Peak Sustained, Volume Upside from FY27

India Equity Analyst - Fundamental & Thematic, Beat the Street

Sudarshan Bhandari

India Equity Analyst - Fundamental & Thematic

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Read Business Not Stock Prices

<ul>
<li>
<a href="https://www.smartkarma.com/entities/national-aluminium-co-ltd" target="_blank" data-smartkarma-citation="entities:1770:1" rel="noopener">National Aluminium (NACL IN)</a> has announced a significant INR 30,000 crore capex over the next five years, its largest in recent history, to expand its core smelting, power generation capabilities.</li>
<li>Targeting an almost doubling of its smelting capacity and securing long-term power supply. This is crucial for NALCO to enhance its competitiveness and achieve the coveted "Maharatna" status by 2030.</li>
<li>This expansion, funded by a mix of internal accruals and debt, positions NALCO for an earnings inflection point, contingent on disciplined execution and favorable long-term commodity cycles.</li>
</ul>



National Aluminium (NACL IN) has announced a significant INR 30,000 crore capex over the next five years, its largest in recent history, to expand its core smelting, power generation capabilities.
Targeting an almost doubling of its smelting capacity and securing long-term power supply. This is crucial for NALCO to enhance its competitiveness and achieve the coveted "Maharatna" status by 2030.
This expansion, funded by a mix of internal accruals and debt, positions NALCO for an earnings inflection point, contingent on disciplined execution and favorable long-term commodity cycles.


The Beat Ideas: Nalco's ₹30,000 Crore Expansion

<ul>
<li>NALCO has guided for alumina realizations around $400/t in FY26, with earnings further impacted by delays in ramp-up of its 1 MTPA alumina expansion project.</li>
<li>Q4 FY25 results were strong, but earnings outlook has weakened significantly with the steep drop in alumina prices.</li>
<li>Valuations appear inexpensive on FY27 earnings at 5x EV/EBITDA, however peristent delays in capacity rampup is concerning. </li>
</ul>


NALCO has guided for alumina realizations around $400/t in FY26, with earnings further impacted by delays in ramp-up of its 1 MTPA alumina expansion project.
Q4 FY25 results were strong, but earnings outlook has weakened significantly with the steep drop in alumina prices.
Valuations appear inexpensive on FY27 earnings at 5x EV/EBITDA, however peristent delays in capacity rampup is concerning. 


NALCO (NACL IN): Record FY25 Profit; Alumina-Led Fall Likely Priced In, Execution Remains Key Risk

<ul>
<li>NACL posted its best ever quarterly performance in 3QFY25, driven by a sharp spike in alumina prices. Alumina prices have since cooled off but remain elevated at above US$450/t</li>
<li>NACL is set to expand its alumina capacity by 33% over the next 12 months. This will help double its external alumina sales from 1mt to 2mt. </li>
<li>Trades at 25% discount to historic PE of 13x despite record earnings, healthy balance sheet and strong near-term volume growth driven by brownfield expansion.</li>
</ul>


NACL posted its best ever quarterly performance in 3QFY25, driven by a sharp spike in alumina prices. Alumina prices have since cooled off but remain elevated at above US$450/t
NACL is set to expand its alumina capacity by 33% over the next 12 months. This will help double its external alumina sales from 1mt to 2mt. 
Trades at 25% discount to historic PE of 13x despite record earnings, healthy balance sheet and strong near-term volume growth driven by brownfield expansion.


National Aluminium (NACL IN) New Capacities and Cheap Valuations to Drive Returns

Thematic (Sector/Industry)

<ul>
<li>Precious and energy-transition metals lead as structural scarcity, central-bank demand, and electrification support gold, silver, copper, aluminium, zinc, and rare earths into 2026.</li>
<li>Bulks and hydrocarbons lag with weak China demand, oversupply, and compressed margins across iron ore, nickel, steel, coal, and crude, keeping the segment firmly underweight.</li>
<li>Top Asia exposures include Zijin, Korea Zinc, Hindustan Zinc, Vedanta, CMOC, JXAM, SMM, Mitsui, Jiangxi Copper, NALCO, Hongqiao, Hindalco, Shenghe, and CNRE.</li>
</ul>


Precious and energy-transition metals lead as structural scarcity, central-bank demand, and electrification support gold, silver, copper, aluminium, zinc, and rare earths into 2026.
Bulks and hydrocarbons lag with weak China demand, oversupply, and compressed margins across iron ore, nickel, steel, coal, and crude, keeping the segment firmly underweight.
Top Asia exposures include Zijin, Korea Zinc, Hindustan Zinc, Vedanta, CMOC, JXAM, SMM, Mitsui, Jiangxi Copper, NALCO, Hongqiao, Hindalco, Shenghe, and CNRE.


Asia Metals Outlook 2026: Scarcity Favours Gold, Copper, Aluminium

India

National Aluminium Co. Ltd. is an integrated aluminum manufacturer. The Company mines for bauxite, refines bauxite into aluminum and manufactures and sells aluminum and aluminum products. National Aluminium Company's products include bauxite, aluminum hydrate, calcined aluminum, aluminum ingots and aluminum wire rods, as well as electricity which is generated for captive consumption.

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National Aluminium (NACL IN)

NALCO — Margin Peak Sustained, Volume Upside from FY27

Q2 FY26 EBITDA reaches ₹1,932 cr with record margins; growth plans include new refinery and mine, potential for 25-30% re-rating due to valuation...

Rahul Jain

The Beat Ideas: Nalco's ₹30,000 Crore Expansion

National Aluminium (NACL IN) plans INR 30,000 crore capex to double smelting capacity and secure long-term power supply, aiming for "Maharatna"...

Sudarshan Bhandari

NALCO (NACL IN): Record FY25 Profit; Alumina-Led Fall Likely Priced In, Execution Remains Key Risk

NALCO's earnings outlook for FY26 is impacted by delays in alumina expansion project, despite strong Q4 FY25 results and inexpensive valuations on...

Rahul Jain