National Aluminium Company (NALCO) shares dipped to INR 317.55, but brokerage Prabhudas Lilladher has upgraded the stock to 'Buy' with a target of INR 385. The upgrade follows a 28.3% jump in Q2 profit despite margin pressure from high input costs. Investors should also note the company’s declared interim dividend of INR 4.50 per share.
National Aluminium Company (NALCO) saw its stock close at INR 317.55 on November 3, 2026, marking a 3.19% decline for the session. Despite this recent downward movement, brokerage firm Prabhudas Lilladher has upgraded the stock rating to 'Buy,' setting a target price of INR 385. This optimism comes shortly after the company announced its second-quarter results for fiscal year 2027.
Q2 Financial Performance and Dividend
For the second quarter of the current fiscal year, NALCO reported a 28.3% year-on-year increase in consolidated net profit, reaching INR 1,835.05 crore. Alongside these results, the company declared an interim dividend of INR 4.50 per share. Investors looking to receive this dividend should be aware that the record date has been set for November 6, 2026.
While the bottom-line growth was healthy, the company faced significant operational challenges. Profit margins were squeezed by rising expenses, particularly for essential raw materials like caustic soda and calcined petroleum coke, as well as higher fuel costs. While metal volumes grew by 8% year-on-year to 121kt, logistics issues led to a 14% drop in alumina sales volumes to 340kt, reflecting the difficulties in managing export dispatches.
Operational Outlook and Market Context
Management has indicated that while production costs remained elevated in the first half of the year, they expect some stabilization in the second half. The company is focusing on improving fuel efficiency and optimizing operational practices to mitigate these pressures. The brokerage's 'Buy' rating is driven by the expectation that global alumina prices will firm up as international smelters increase their output, which could help support price realizations.
Monitoring Risks
Investors should consider several factors that could influence future performance. The company’s profitability remains sensitive to volatility in the London Metal Exchange (LME) aluminum prices and global alumina price fluctuations. Furthermore, NALCO is currently engaged in large-scale capital spending projects, including the development of a 1mtpa alumina refinery, new bauxite mines, and smelter expansion. The successful and timely execution of these projects is critical, as any delays or cost overruns could impact financial flexibility.
Additionally, geopolitical uncertainty continues to pose a risk to export logistics, which could affect sales volume consistency. Market participants will likely track the company's ability to control input costs in the coming quarters and the progress of these ongoing expansion projects as key indicators for long-term growth.