National Aluminium Company: Target Price Revised to Rs 413 by Prabhudas Lilladher
National Aluminium Co Posts Strong Q4FY26 Performance Despite Volume Constraints
National Aluminium (NACL) has delivered a strong operating performance in the fourth quarter of financial year 2026, despite facing volume constraints in aluminium and weaker alumina prices. The company's aluminium volumes declined marginally due to capacity limits, while alumina volumes were impacted by lower production, with a shift towards domestic sales increasing by 200% year-over-year (YoY) amid weaker exports.
NACL's metal realizations improved significantly in the quarter, rising by 14% quarter-over-quarter (QoQ) to USD 3,494 per tonne. In contrast, alumina realizations remained soft at USD 354 per tonne, with a marginal increase of 1% QoQ, as prices declined by 3.3% QoQ. The company's power and fuel expenses continued to remain lower, supported by higher captive coal usage (4 million tonnes out of approximately 7.2 million tonnes required) and reduced employee costs.
Power and Fuel Expenses Expected to Decline Further in FY27
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NACL's power and fuel expenses are expected to decline further in the current financial year, with higher captive coal consumption anticipated. Any increase in raw material costs should be largely offset by savings in power and employee expenses. The upcoming 1 million tonnes per annum (mtpa) refinery is expected to contribute around 0.2 million tonnes of volumes in FY27, subject to timely commissioning and ramp-up.
Outlook
Maintaining a 'HOLD' recommendation, the revised target price (TP) for NACL is INR 413 (from INR 407), assigning the same 5x enterprise value (EV) to earnings before interest, taxes, depreciation, and amortization (EBITDA) multiple. At the current market price (CMP), the stock is trading at 5.5x/4.9x EV of FY27/28E EBITDA, which appears fully valued in the absence of meaningful volume growth.
| Company | FY27E EBITDA Multiple | FY28E EBITDA Multiple |
|---|---|---|
| National Aluminium (NACL) | 5.5x | 4.9x |
| (5.5x EV of FY27E EBITDA) | (4.9x EV of FY28E EBITDA) |
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Note: The EBITDA multiples are based on the current market price of the stock.
Investor Takeaway
Investors should consider National Aluminium Company's strong operating performance and potential for further cost savings.
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