Motilal Oswal - MSOL: Morning India (25/September/18): 1. Nalco (Annual Report Analysis); 2. Biocon (Favorable regulatory outcome enhances biosimilars prospects); 3. Metals Weekly

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Motilal Oswal

Team Research

MSOL: Morning India (25/September/18): 1. Nalco (Annual Report Analysis); 2. Biocon (Favorable regulatory outcome enhances biosimilars prospects); 3. Metals Weekly

MOrning India (25/September/18): 1. Nalco (Annual Report Analysis); 2. Biocon (Favorable regulatory outcome enhances biosimilars prospects); 3. Metals Weekly

Today’s top research idea

Nalco: Annual Report Analysis; Wages eroding its strategic advantages; valuations attractive

We analysed Nalco's FY18 annual report.

Nalco realized a premium over the LME of USD57/t on exports and USD196/t in the domestic market. Alumina realization was up 26% to USD370/t. Average recurring annual wages increased 32% to INR29m - highest in the industry.
Cost of production (CoP) of metal increased 18% to USD2187/t as minor operating leverage was offset by increase in wages, duties and input cost. CoP of alumina increased 19% to USD224/t.
Nalco stepped up dividend by 32% and capex by 8%, yet net cash surplus remained flat at INR34b. Bauxite mine expanded capacity by 310kt. Work on 1mtpa expansion of alumina refinery has started. Nalco is a pure price play thus key beneficiary of INR depreciation and high alumina prices. Stock is trading at attractive valuations i.e. EV/EBITDA of 3.4xFY20E and P/E of ~7xFY20E.

Piping hot news

Brent crude crosses $80 as Opec rejects Trump's call for oil output boost

Brent crude climbed above $80 a barrel after Opec and its allies signalled less urgency to boost output, despite U.S. pressure to temper prices.Futures in London rose as much as 2.7 per cent to its highest level since November 2014.

25/09/2018 22 EN

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Motilal Oswal

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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MSOL: Morning India (25/September/18): 1. Nalco (Annual Report Analysis); 2. Biocon (Favorable regulatory outcome enhances biosimilars prospects); 3. Metals Weekly

MOSL : HOME FIRST FINANCE COMPANY: Earnings in-line with sustained improvement in asset quality

MOSL : SHOPPERS STOP: Ticking the right boxes

MOSL : ERIS LIFESCIENCES: Enhanced efforts toward product launch-related activities

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