NATIONALUM - National Aluminium Co. Ltd. Share Price

In the earnings conference call on August 8, 2025, the management of National Aluminium Company Limited (NALCO) provided a positive outlook, emphasizing growth and robust performance across various parameters. Key points include:

1. Financial Performance: NALCO reported a 33% increase in revenue year-on-year and a 77% jump in profit after tax (PAT) for Q1 FY26 compared to the same quarter last year. The company announced a final dividend of Rs. 2.50 per share.

2. Production Figures: The company achieved a growth of 6.6% in bauxite production and a significant 35% increase in alumina production. For aluminum, there was a 3% growth, while power production also grew by 6%. The sales figures reached record highs during the quarter, with a run rate of approximately 2.3 million tons for alumina and 460,000 tons for aluminum.

3. Future Production Targets: Management targets to operate at 100% capacity and intends to ramp up alumina production capacity by 1 million tons due to the ongoing expansion project, set for commissioning in June 2026. It is projected that in FY27, production could reach around 500,000 tons from the newly expanded refinery.

4. Market and Industry Outlook: The global GDP growth is projected at 3% for 2025 and 3.1% for 2026. NALCO anticipates stable LME prices and rising demand driven by infrastructure and electric vehicle sectors. The domestic aluminum sector is expected to grow by 9%, supported by the government's aim to foster a $30 trillion economy by 2047.

5. Strategic Investments: NALCO plans to enhance its operations through value-added products and aims to set up a new wire rod mill and aluminum foil production unit with an estimated investment of Rs.200-300 crores for the rod mill and Rs.50-60 crores for the foil production unit.

6. Sustainability Initiatives: The company emphasizes environmental management, asserting zero debt status, securing raw material supply, and ensuring compliance with renewable power obligations.

Overall, NALCO's management remains optimistic about both domestic and global market conditions, leveraging its integrated operations and strategic expansions to drive future growth.

Here are the major questions and respective answers from the Q&A section of the earnings transcript:

1. Question: "What is the status of the alumina refinery and what is the expected ramp-up plan post-recommissioning?"

   Answer: As far as the 5th stream refinery expansion is concerned, we aim to complete all mechanical jobs by March 2026 and will start commissioning afterward. We plan to produce 5 lakh tons in FY27, ramping up to 10 lakh tons thereafter. Progress at the site is good, and we stand by our commitment.

2. Question: "What capacity utilization do you expect from the existing alumina production?"

   Answer: We are significantly over-utilizing our current capacity of approximately 22.5 lakh tons. This year, we're planning to exceed that and may produce around 23 lakh tons, achieving over 100% of our rated capacity.

3. Question: "How do you foresee Russian alumina returning to the market?"

   Answer: I don't believe Russia has an excess of alumina to offer. European sanctions hamper their aluminum exports. However, Indian aluminum industries are benefiting from a free trade agreement with the UK, which presents opportunities for growth despite the tariffs on US imports.

4. Question: "What is your projected volume from your captive coal mining?"

   Answer: We are on track to produce around 4 million tons this year from our captive coal mines, and we expect no disruptions during the monsoon, as we have sufficient coal stock both in our power plants and mines.

5. Question: "When do you expect operational timelines for the new bauxite mine and alumina refinery?"

   Answer: We expect to start the Pottangi bauxite mine by February or March 2026, while the alumina refinery is targeted for commercial production by June 2026. The cost of production in the new facility will be similar to our current costs due to efficiency improvements.

6. Question: "What are your expectations regarding alumina realizations for this quarter?"

   Answer: The realization for alumina this quarter was approximately $416, but we anticipate that spot prices in upcoming quarters will settle in the range of $400 to $450.

7. Question: "Can you provide details on your long-term contracts versus spot prices for exports?"

   Answer: Currently, about 80% of our alumina exports are on a spot basis, with only 20% tied to long-term contracts. This trend reflects our strategic focus on maximizing immediate market opportunities.

8. Question: "How is the cost of production for aluminium influenced by your in-house coal supplies?"

   Answer: Our in-house coal supply translates to significant cost savings. We expect to see approximately a 400 rupee advantage per ton compared to purchasing from external sources, enhancing our overall cost efficiency.

These summaries condense the main questions and answers that provide insights into the company's operational strategies, market conditions, and financial performance.