MOSL: NALCO (Neutral)-Inline-Aluminum ramping-up as expected
​Nalco: Inline; Aluminum ramping-up as expected; Maintain Neutral
(NACL IN, Mkt Cap USD2.6b, CMP INR87, TP INR87, 0% Upside, Neutral)
- ​NALCO’s 2QFY18 EBITDA, as expected, increased by healthy 47% QoQ/95% YoY to INR3.3b driven by higher realization and volumes. Though there was an impressive beat on alumina volumes, it was offset by lower than expected realization and cost inflation. Exceptional income of INR1.6b included DMF reversal of INR1.9b, net of entry tax provision of INR0.3b. Adj. PAT increased 73% QoQ / 84% YoY to INR2.2b, ahead of est. of INR1.6b on higher other income and lower tax rate (at ~27% vs. est. 33%).
- Alumina production was down just 3% QoQ to 509kt (est. 444), despite being a seasonally weak quarter. Sales increased 47% QoQ to 380kt, aided by de-stocking. Realization increased 6% QoQ to USD334/t. Derived opt. cost (incl. dep.) per ton increased marginally QoQ, as operating leverage gains were offset by higher input prices.
- Aluminum production increased 5% QoQ (13% YoY) to 105kt (est. 109kt). Sales increased 28% QoQ to 113kt, aided by de-stocking. All-in aluminum realization was flat QoQ at USD2,250/t as premium was lower due to mix. Derived opt. cost (incl. dep.) per ton increased USD40/t QoQ due to increase in power and other raw material cost. The increase in power cost was due to domestic coal shortage and should normalize soon.
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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