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National Aluminium Company (NALCO) reported its fourth fiscal quarter of 2026 with an EBITDA of INR 23.4 billion. This was 4% below what analysts expected. The company faced lower sales volumes and prices for its alumina, which canceled out the gains from higher London Metal Exchange (LME) aluminium prices during the quarter. Despite these challenges, NALCO's stock rose 2.48% to ₹417.85 on May 5, 2026.
Major Expansion Plans Could Lead to Debt
NALCO's biggest long-term concern is its large spending plan. Over the next three to four years, the company plans to invest about INR 300 billion. This money will build a new 500,000-tonnes-per-year aluminium plant and a 1,080 MW power plant. Analysts at ICICI Securities believe this large expansion could change NALCO's finances significantly. The company, which currently has a lot of cash, might end up with net debt. This change requires investors to watch closely how it affects NALCO's risks and valuation. For comparison, rival Vedanta reported a market value of about ₹1.13 lakh crore on May 4, 2026, as it underwent restructuring.
Near-Term Outlook Mixed Amid Refinery Plans
The outlook for the first quarter of fiscal year 2027 looks good, mainly because LME aluminium prices are expected to rise. However, this positive view is checked by still-low alumina prices. NALCO's 1-million-tonnes-per-year alumina refinery is set to start operations by Q2FY27, which is a key event. But its full financial effect won't be felt until fiscal year 2028. This means investors need to weigh short-term price changes against the longer process of getting the new capacity fully working. On May 4, 2026, NALCO's stock traded at a P/E ratio of 12.88, which is moderate compared to Hindalco Industries' P/E of 14.57, but higher than Vedanta's 6.70.
Analyst Rating and Concerns Over Debt
ICICI Securities has kept its 'HOLD' rating on NALCO, with a price target of INR 395. This target indicates little immediate growth potential, especially since the stock was around ₹407.80 on May 4, 2026. The main concern for investors, or the "bear case," is how the large capital spending program will affect the company's finances. Moving towards a net-debt position, even slowly, could mean higher borrowing costs. NALCO has been debt-free in the past, but this large investment is a major change. The global commodity market can also be unpredictable. While LME aluminium prices have been strong, some forecasts predict alumina prices might fall or stay flat. Competition from big companies like Hindalco and Vedanta, which have large operations and varied strategies, is also a constant challenge. Vedanta is currently splitting its business to unlock value across different areas. A key risk is the long time it will take for the new refinery to boost earnings, especially if commodity prices drop in the meantime.
Divergent Analyst Views
While ICICI Securities is holding NALCO, other analysts have different opinions. Axis Securities recently upgraded the stock to 'Buy', predicting a 10% rise with a target price of INR 440. They cited better earnings outlook and positive commodity prices, plus strong local demand. However, the general analyst consensus is 'Neutral', with an average 12-month price target near INR 388.67, suggesting a possible drop from current prices. This difference in views shows how analysts weigh NALCO's growth potential against its risks. NALCO also announced a dividend of ₹2.0 per share on April 30, 2026, with a record date of May 8, 2026.