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Epic Research
National Aluminium Company (Buy)
CMP: ₹60.05
Target: ₹92
National Aluminium Company (Nalco) has posted turnover of ₹5,952 crore H1 FY18-19, showing a 42 per cent growth over H1FY17-18. Net Profit came at ₹1,197 crore up 229 per cent against ₹364 crore in H1 of the previous fiscal (2017-18) and increase of three times. Operating profit reported was ₹1,624 crore against ₹334 crore in H1 FY17-18, an increase of four times. EBIDTA margin doubled from 17 per cent to 34 per cent.
Nalco has posted net profit of ₹510 crore, as against ₹235 crore in the corresponding quarter of previous FY. Operating profit of Q2FY18-19 has increased by 229 per cent at ₹735 crore against ₹ 223 crore in same quarter of previous fiscal. Company has shown consistent performance for first two quarters and we expect the momentum to continue. Company has worked upon improving margins and implemented strategic approach towards marketability in spot markets. Despite high volatility in alumina and aluminium markets due to US trade sanctions, etc, Nalco has been able to significantly improve its performance due to the new business model introduced by the company one and a half year back.
On TTM (trailing twelve months) basis, stock gives us p/e of 5.3x which we believe is low for a debt free and high dividend paying company.
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