MOSL: NALCO (Neutral)-Volumes suffer ahead of GST rollout-Higher wages, electricity duty eroding raw material cost advantage
​Nalco: Volumes suffer ahead of GST rollout; Higher wages, electricity duty eroding raw material cost advantage
(NACL IN, Mkt Cap USD2.1b, CMP INR70, TP INR63, 10% Downside, Neutral)
- Nalco's 1QFY18 performance disappointed, with EBITDA of INR2.3b (+17% YoY/-47% QoQ) coming in below estimate of INR3.6b due to lower sales volume on inventory build-up ahead of GST rollout and weaker alumina realization. PAT declined 4% YoY/52% QoQ to INR1.3b (est. of INR1.8b) on lower other income.
- Aluminum production increased 1% QoQ to 101kt, but sales declined 15% QoQ to 89kt. Alumina production was unchanged QoQ at 526kt, but sales declined 31% QoQ to 259kt.
- Aluminum realization increased USD27 QoQ to USD2,233/t on higher LME. However, EBIT declined INR4,653 QoQ to INR6,521/t (USD101) on currency appreciation.
- Alumina realization declined USD32 QoQ to USD324/t. EBIT declined INR2,852 to INR4,061/t (USD63/t) on realization and currency.
- Power cost rose 15% YoY to INR3.88/kWh due to an increase in electricity duty on captive power generation by Odisha. Employee cost rose 24% on provision for wage negotiation.
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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