Budget 2022 Pick: Rakesh Jhunjhunwala-backed National Aluminium Company stock likely to surge up to 20% - check brokerage view

Ahead of Budget 2022, the domestic brokerage house ICICI Direct sees an upside of around 20 National Aluminium Company Limited (NALCO) - a stock which is backed by ace investor Rakesh Jhunjhunwala. The scrip on Thursday closed almost 1 per cent lower to Rs 106.3 per share on the BSE. 

ICICI Direct Research lists out both fundamental and technical triggers, expecting a bumper return in NALCO. 

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The brokerage advises to buy this stock between 102-108 per share and estimates a target of Rs 125 per share, which is little above its 52-week high, touched on October 18, 2021. 

Rakesh Jhunjhunwala had taken a fresh position in NALCO, by picking 25,000,000 equity shares for 1.6 per cent stake during September-ended quarter of this fiscal. He has maintained his holdings during the December quarter, as per shareholding pattern of the company. 

The counter in the last one year has jumped over 125 per cent as compared to over 22 per cent rise in the S&P BSE Sensex.  

Fundamental Outlook: 

Incorporated in the year 1981, NALCO has one of the largest integrated Bauxite-Alumina-Aluminum-Power complexes in India. The company’s smelter plant at Angul, Odisha, is known for its energy efficient operations and for higher purity aluminum production.  

Recently, NALCO has formally operationalized the 960th pot in its smelter plant at Angul and has received excellent MoU rating for 2020-21 by Ministry of mines. The company has achieved 100 per cent operationalization of all the pots with Angul plant. 

Technical Outlook: 

The share price of NALCO is in steady up trend and earlier during the year in October 2021 has generated a breakout above its four-year range signalling a structural turnaround.  

The entire up move since Oct 2020 is well channelled, signalling sustained demand and incremental buying opportunity at the lower band of the rising channel. The stock has recently rebounded taking support at the lower band of the rising channel thus offers fresh entry opportunity. 

ICICI Direct expects the stock to continue its positive momentum and head higher towards the 52 weeks high of Rs 125 levels in the coming months.