MOSL: NALCO (Neutral)-Alumina prices and LME drive EBITDA higher
NALCO: Alumina prices and LME drive EBITDA higher; Capex spend to pick up; Maintain Neutral
(NALCO IN, Mkt Cap USD2.2b, CMP INR75, TP INR79, 5% Upside, Neutral)
NALC’s 3QFY18 adj. EBITDA increased 39% QoQ (64% YoY) to INR4.7b, despite missing a few alumina shipments. EBITDA is adjusted for (a) provision of INR2.8b for an increase in the ceiling limit of gratuity for non-executive employees and (b) reversal of INR1.6b pertaining to current year charge on settlement of disputed water charges. Adj. PAT increased 24% QoQ/62% YoY to INR2.7b. PAT is adjusted for reversal of INR7.8b on settlement of disputed water charges pertaining to previous years.
- Alumina production increased 1% QoQ (-9% YoY) to 516ktm, while sales declined 33% QoQ (-18% YoY) to 256kt. Average realization increased 26% QoQ to USD422/t.
- Aluminum production increased 5% QoQ/12% YoY to 111kt. Average product premium too inched up by USD30/t.
Capex spend to pick up; Maintain Neutral
- NALC is undertaking various projects to expand capacity by 500kt at smelter, 1mtpa at alumina refinery, etc. We understand that actual spend on alumina project has started, while other projects are still on drawing board. Therefore, we are increasing capex from INR6b in FY18 to INR11b in FY19E.
National Aluminium is engaged in the manufacture and distribution of aluminum related products and in the generation of electricity. Co.'s aluminum products include bauxite, zeolite, alumina hydrate, special grade hydrate, calcined alumina, special grade alumina, aluminium standard and sow ingots, aluminium wire rods, aluminium billets, aluminium strips and rolled products.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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