NALCO Q2 Earnings Smash Expectations! ICICI Securities Downgrades to HOLD - See New Target Price!

National Aluminium Company (NALCO) has posted impressive financial results for the second quarter of FY26. Its EBITDA reached INR 19.2 billion, which was 29% higher than the estimates provided by ICICI Securities. This strong performance was primarily fueled by a significant increase in alumina sales volumes. NALCO has reiterated its guidance to achieve 1.25–1.28 million tonnes of alumina sales for the full fiscal year FY26. Furthermore, the company is on track to complete its alumina refinery expansion project, which will add 1 million tonnes per annum (mntpa) of capacity, by the first quarter of FY27. The projected volume increase from this expansion is 500,000 tonnes. For aluminium sales, the target is set at 460,000 tonnes. Looking ahead, NALCO has ambitious plans to double its aluminium production capacity by FY30. This expansion will be supported by a considerable capital expenditure (capex) of INR 300 billion, allocated from FY27–28 onwards, with INR 170–200 billion dedicated to smelter capacity and the remainder for the power plant.

Impact ICICI Securities has rolled over its target multiple to FY28, calculating a revised target price (TP) of INR 246 based on 5 times the estimated FY28 Enterprise Value to Earnings Before Interest, Taxes, Depreciation, and Amortization (EV/EBITDA). The brokerage firm has downgraded its rating on NALCO from a previous implied positive rating to 'HOLD'. This downgrade might lead to some short-term caution among investors, although the long-term capacity expansion plans signal a bullish future outlook for the company and the sector. Rating: 6/10

Difficult Terms: EBITDA: Earnings Before Interest, Taxes, Depreciation, and Amortization. A measure of a company's operating performance. Alumina: A white powder, aluminium oxide, which is an intermediate product in the refining of bauxite into aluminium. Mntpa: Million tonnes per annum. A unit of measurement for production capacity. FY (Fiscal Year): A 12-month period used for accounting purposes, often different from the calendar year. FY26 refers to the fiscal year ending March 31, 2026. Capex: Capital Expenditure. Money spent by a company to acquire or upgrade physical assets like property, buildings, and equipment. EV/EBITDA: Enterprise Value to Earnings Before Interest, Taxes, Depreciation, and Amortization. A valuation metric used to compare companies. TP (Target Price): The price at which an analyst or broker believes a stock should trade in the future. Smelter: A facility where ore is smelted (melted) to extract metal. In this case, for aluminium.