SBI Securities
Target: ₹420.9
CMP: ₹367.15
is an integrated aluminium producer encompassing mining ore to metal. It is one of the lowest-cost producers of Alumina.
Capacities for respective segment is as follows: Bauxite mining – 68,25,000 tonnes per annum (tpa) (North and Central Block) and 31,50,000 tpa (South Block); Alumina production – 22,75,000 tpa (normative capacity at 21,00,000 tpa); Power production – 1,200 MW; Aluminium metal production – 4,60,000 tpa; and Wind Power – 198 MW.
The company is aggressively pursuing a 0.5 million tpa (mtpa) capacity expansion. Detailed project report is expected to be ready by June/July 2026.
Groundwork and capex are expected to kick-start from FY27 and the commissioning is targeted around December 2030. The estimated combined capex is ₹30,000 crore.
NALCO ramped up production at its Utkal D coal block to 2 mtpa in FY24, helping reduce power and fuel costs. The power plant requires about 7.2 mtpa of coal. For FY26, it targets producing 4 mtpa from the Utkal D & E blocks, which is expected to generate cost savings of ₹200-250 per tonne.
For FY26, NALCO plans to incur a capex of ₹1,700 crore, rising to ₹1,800-2,000 crore in FY27.
The new 1-mtpa refinery is expected to start commissioning in June 2026. While the full capacity will stabilise by December 2026, a realistic production target of 0.3 mtpa is aimed for FY27. At CMP, the stock is trading at 7.6x/7.2x of its FY26E/FY27E EV/EBITDA based on Bloomberg consensus estimates.