Nalco shares snap 2-day losing run; is it time to buy this PSU stock?

Shares of National Aluminium Company Ltd (Nalco) climbed 5 per cent in Wednesday's trade, snapping a two-day losing run. Stock analysts said there are limited near term catalysts for the PSU Navratna. They stayed neutral-to-positive on Nalco's stock prospects, with targets ranging in the Rs 200-220 range. Nalco shares rose 4.64 per cent to hit a high of Rs 191.95 on BSE.

Nalco's price-driven earnings may peak out soon but the structural cost advantage from captive coal is expected to remain, said ICICI Securities. This brokearge does not see any significant earnings catalysts for Nalco in the near-term, as the benefit of low-cost captive coal is also in the base from Q3FY25.

"We trim our FY26 Ebitda estimate by 3 per cent and roll over the valuation to FY27E at alumina price estimate of $490/te. Besides, we trim our valuation multiple to 5 times, taking cognizance of global alumina supply constraints easing out, progressively in FY26E. Our revised target of Rs 205 still implies an upside of 12 per cent over CMP," ICICI Securities said.

Emkay Global said the progress on the alumina refinery project has slowed, with the company delaying it by three months. While it does not build in any volume growth for FY26 to allow for any delays/teething issues, Emkay said the delay could be seen as slightly negative by the market.

"For Q4, despite the recent correction in alumina prices, we expect Nalco to deliver a strong performance given the 1-month lag in price realisations as well as better averaging effect. On balance, our Nalco investment case remains well in shape and we see the recent correction as an entry opportunity into the stock," it said.

With limited production headroom, alumina prices will play a vital role in the near-term operating performance, said MOFSL. "At CMP, NACL trades at 5.4 times on EV/Ebitda and 1.5 times on P/B, and the stock is largely priced in at current levels.

"We reiterate our neutral rating on the stock with a revised target of Rs 200, valuing it at 6 times FY27 EV/Ebitda," it said. Axis Securities retained its 'Buy' rating but cut its target price to Rs 220 from Rs 250 earlier.