NALCO -
Q4 and FY 26 highlights -
Q4 outcomes -
Revenues - 4981 cr, down 5 pc
EBITDA - 2547 cr, down 12 pc
PAT - 1718 cr, down 17 pc
Q4 physical performance -
Alumina exports - 3 lakh MT
Alumina domestic sales - 38k MT
Aluminium exports - 6.11k MT
Aluminium domestic - 1.16 lakh MT
FY 26 outcomes -
Revenues - 17729 cr, up 6 pc
EBITDA - 8613 cr, up 8 pc
PAT - 5813 cr, up 9 pc
Alumina sales ( exports + domestic ) - 14.46 lakh MT
Aluminium exports - 13k MT
Aluminium sales - 4.61 lakh MT
FY 26 physical performance -
LME prices for aluminium averaged around $ 3150 / ton in FY 26. Today’s prices are @ 3550 / ton
NALCO is an integrated Bauxite - Alumina - Aluminium -Coal - Power company. It is the global leader in producing bauxite and alumina at the lowest cost
Top 6 user Industries of aluminium -
Electrical
Transportation and Automobiles
Building and construction
Consumer durables
Machinery and Equipment
Packaging
Company expects the demand for aluminium in India to keep growing @ 6-7 pc CAGR for next 5 yrs
Existing facilities and Ongoing expansion projects -
Bauxite - 7.5 million MTPA ( located @ Panchpatmali, Odhisa ) - total reported resources @ 310 million MT
Expansion underway @ Pottangi Bauxite mines ( located @ a distance of 25 km from Panchpatmali ). It ll have a capacity of 3.5 MTPA with reserves of 110 million Tons. Expected to be commissioned in May 26
Alumina Refinery - 2.1 million MTPA ( producing alumina hydrate, special hydrates, Calcinated alumina ) - located @ Damajodi ( Odisha ) - aprox 14 km away from Panchpatmali. The mined-out bauxite is transported from captive mine to refinery by a 14.6 KM long single-light multi-curve 1800 tonnes per hour (TPH) capacity cable belt conveyor
Expansion is currently underway at the Alumina refinery. Capacity is expected to go up by 1 MTPA. Expected to be commissioned in Jun 26
Aluminium Smelter - 0.46 million MTPA ( producing Aluminium metal - Ingots, Billets, Wire Rods, Rolled products ) - located @ Angul ( Odisha ). The alumina produced is transported to aluminium smelter at Angul (Odisha) and to Vizag ( for exports ) port by rail
Smelter expansion shall double the company’s refined aluminium’s capacities. Likely to be commissioned in Dec 30
Captive coal mines - 4 million MTPA ( @ At Utkal coal mines in Angul district )
Company can increase its Coal block’s production by 20 pc above 4 million MTA without environmental clearances
Captive thermal power capacities @ 1200 MW ( 10 X 120 MW ) located @ Angul
Additional captive power plant with capacity of 1080 MW - expected to go live in FY 31
Wind power capacities @ 198 MW
Capex for company’s Aluminium Smelter shall begin in FY 28. For Smelter, the capex should be around 17000 cr. For 1080 MW power plant, capex requirement should be around 13000 cr
Notes from previous concalls -
KABIL JV ( between Nalco : Hind Copper : Mineral exploration and consultancy limited in the ratio 40 : 30 : 30 ) has 5 mines in Argentina ( Lithium mines ). Non invasive exploration is complete. Results were encouraging. Commercial mining may take > 2 yrs to begin ( once they ascertain commercial viability for which they ll take another 6 months )
Capex for Alumina refinery expansion has been around 4000 cr. Should spend another 1300 cr before the refinery goes live. Should be able to make Rs 10000 / MT ( aprox $ 109 / ton ) kind of margins ( post depreciation ) from this new refinery ( even at depressed alumina price levels )
Should be able to produce additional 2 lakh MT of Alumina in FY 27 and 10 lakh tons ( full ramp up ) by FY 28 - from the new refinery. This should add another 200 cr / 1000 cr to company’s EBITDA over FY 27 / FY 28
2-3 new Alumina refineries have come up in Indonesia + 1-2 smelters have been shut in China and elsewhere. That’s why Alumina prices r weak but aluminium prices continue to rise
2-3 new Alumina refineries have come up in Indonesia + 1-2 smelters have been shut in China and elsewhere. That’s why Alumina prices r weak but aluminium prices continue to rise
In talks with two companies to form JVs for extraction of rare earth minerals from Alumina Red Mud. Aprox 1-1.5 tons of Red mud is generated / 1 ton Alumina production
Also forming a JV with another company for extraction of Gallium from Liquid Residual of Alumina production
Aluminium cost of production in Q4 is running @ aprox $ 1750 / ton
1.93 tons of Alumina are required to produce 1 ton of Aluminium
In Q3 - Company’s avg selling premium in domestic mkt ( over LME prices ) was aprox $ 28
CP Coke ( calcinated petroleum coke ) is used as Anode in Aluminium Smelters
Notes from Q4 concall -
Alumina realisations @ $ 370 vs $ 580 / ton in FY 26 vs FY 25 - steep fall in realisations
Aluminium realisations @ $ 2700 vs $ 2550 / ton in FY 26 vs FY 25 - descent gain in avg realisations wrt metal. Current metal price is very healthy @ > $ 3550 / Ton
Alumina production target for next FY @ 2.5 million MT, Aluminium @ 0.47 lakh MT
Alumina exports directed to ME was aprox 40 pc of company’s Toal exports pre - Iran war. Since those supplies are now under pressure, spot Alumina prices have now fallen further to $ 310 / Ton. Aiming to make up for the lost Alumina sales from sales to other geographies + domestic sales. A key advantage that NALCO enjoys is that the quality of its Bauxite mines is rich. Because of which, they enjoy a benefit of $ 100 / Ton in Alumina and $ 200 / Aluminium production
Alumina realisations in Q4 were @ $ 348 / Ton. As of end Apr, they r selling Alumina @ $ 310 / Ton
Capex tgts for FY 27, 28, 29 - should be around 1.8k, 4k and 8k cr
Company’s avg cost of production for Alumina is around $ 230 / Ton
Assuming avg Aluminium and Alumina prices @ $ 3350 and $ 320 + Avg Aluminium and Alumina sales @ 4.7 lakh and 15 lakh tons - Revenue from Aluminium and Alumina sales for FY 27 should be around 14.9 k cr + 4.5k cr = 19.5 k cr. These figures for FY 26 were @ 12k cr + 5k cr = 17 k cr - these r optimistic assumptions 
Next yr, their employee costs should be lower - as fresh hirings are < superannuations + the Superannuating employees draw greater salaries
Capex incurred in FY 26 was @ 2000 cr
Alumina surplus should continue in FY 27 as well. So the prices should naturally remain under pressure
Company’s annual requirement vs captive production of coal in FY 26 stood @ 7.2 million tons vs 4.2 million tons. They aim to ramp up captive production to 4.8 million tons in FY 27
Company has a JV with GACL to produce caustic soda. half of their caustic soda requirements are met by the production from that JV. Aprox 200 kg of caustic soda is required for 1 MT production of aluminium
Caustic soda prices are up 7-8 pc in last 4-6 months
Cash on books @ aprox 8.5k cr
Management believes, $ 300-310 / Ton should be the floor for Alumina prices
Will be adding brownfield capacity to their flat rolled + wire rod products ( subsumed in their capex guidance ). Its a profitable business area for them
Employee costs should see an avg hike of 12-14 pc in FY 28 - on account of implementation of new pay commission
In talks with Neyveli Lignite to form a 50:50 JV - to share the capex for the proposed power plant to be built along with the new Aluminium smelter. Talks are in advanced stages. Should be a sweet deal for Neyveli as they have Lignite mines in nearby areas
The royalty that the company pays on Bauxite mining depends on the LME prices. Hence continues to vary all the time
For FY 26, ratio of revenues from Aluminium : Alumina was @ 73 : 27. Fall in Alumina prices is being more than offset by gains in Aluminium prices
Their JV with GACL produced a negative EBITDA of 30 cr. This FY, it should make a positive EBITDA
Disc: hold a small trading position, not SEBI registered, posted only for educational purposes, biased
