MOSL: NALCO (Downgrade to Neutral)-High opt. cost and employee provision drive miss
​Nalco: High opt. cost and employee provision drive miss; Competitive adv. deteriorating on higher cost; Downgrade to Neutral
(NACL IN, Mkt Cap USD1.9b, CMP INR68, TP INR65, 4% Downside, Downgrade to Neutral)
- Nalco's 4QFY17 EBITDA grew by 79% YoY to INR4.3b, but was well below estimate of INR5.3b on higher operating cost and wage hike provision. Adj. PAT grew 30% YoY to INR2.7b (est. INR3.1b). For FY17, EBITDA was up 15% YoY to INR10.7b and adj. PAT by 2% to INR7.1b.
- Alumina/Aluminum sales were flat YoY at 377kt/105kt, respectively.
- Alumina realization per ton was up USD106/68 YoY/QoQ, respectively, to USD345. Aluminum was up USD466/301 YoY/QoQ, respectively, to USD2,207, higher than the movement in LME probably due to product mix.
- Wage revision provision of INR810m (w.e.f. Jan 1st 2017) represented a wage hike of ~25%. Power cost was up 27% YoY to INR3.75/kWh.
- Alumina implied cost per ton was up USD24 to USD242. Aluminum cost was up USD275 to USD2,040 on higher employee, RM and product mix.
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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