Nalco shares trade in the red post-March quarter result; should you buy now?

Nalco share price: National Aluminium Company (NSE: NATIONALUM) shares declined nearly 1 per cent to Rs 80.25 apiece on NSE on Thursday, May 25, after the company released its March quarterly numbers. The stock has been trading in the red for the past three trading sessions.

Nalco Q4 results

The company logged a standalone profit after tax (PAT) of Rs 566.26 crore for the quarter ended March against Rs 1,026 crore registered in the corresponding quarter of the previous year which was a decline of 49 per cent. The company’s revenue declined 16 per cent to Rs 3,671 crore for the three-month period from Rs 4,351 crore a year ago. The mining company’s margin stood at 20.8 per cent against 37.4 per cent a year ago.

“Worth mentioning that the higher input cost coupled with the challenging global business environment, supply-demand and market volatility, has impacted Nalco's profit margins as expected despite the fact that the company has registered considerable growth in several fronts in FY 2022-23,” the company said in its regulatory filing.

Brokerages' view

Axis Securities has given a ‘hold’ rating on Nalco for a target price of Rs 84 apiece. “Capex requirement and probable cost overruns over the next few years on alumina refinery plant expansion along with delay in commissioning of coal blocks could put pressure on the cash flows of the company,” the brokerage report read.

Phillip Capital has given a ‘buy’ call on Nalco for a target price of Rs 90 apiece.

“Commissioning of Utkal D coal block is expected to aid some cost reduction in FY24. We expect the performance has already bottomed out on peak power cost and henceforth EBITDA/t will improve,” said the brokerage in its report.

NALCO shares: Past performance

NALCO shares have lost over 4 per cent of their value in 2023 so far, a period in which the Nifty headline index has risen about one per cent.

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