MOSL: NALCO (Buy)-Higher cost and lower realization impact performance-Cutting estimates to factor in alumina/LME price decline
NALCO: Higher cost and lower realization impact performance; Cutting estimates to factor in alumina/LME price decline
(NACL IN, Mkt Cap USD1.1b, CMP INR43, TP INR50, 17% Upside, Buy)
EBITDA of INR2.1b (-59% QoQ) came in below our estimate of INR4.3b owing to higher aluminum cost of production, lower-than-expected aluminum volumes and likely lower alumina volumes. The sequential decline in EBITDA can be attributed to lower alumina/LME prices and higher cost. Adj. PAT was down 69% QoQ at ~INR1b (our estimate: INR2.6b).
- Aluminum: Production was steady QoQ at 111kt, while sales were down 12% QoQ at 103kt. Realizations declined 1% QoQ to USD2,049/t on account of lower LME prices, partly offset by better premiums. Implied CoP increased 10% QoQ to USD2,017/t due to higher fuel costs and lower scale benefits.
- Alumina: Assuming alumina realizations of ~USD369 (avg. 1Q prices), the sales decline stands at 39% QoQ to 231kt.
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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