Multibagger NALCO share price: 5 key reasons why SBI Securities expects 19% gains for the stock

Stock Market Today: Multibagger National Aluminium Company (NALCO) share price that has gained more than 137% in last one year sees strong investors and analysts confidence. The National Aluminium Company (NALCO) share price is currently trading at ₹197-198 levels. the target price of SBI securities for National Aluminium Company (NALCO) share price stands at ₹234.60. Here are 5 key reasons why SBI Securities expects more than 19% upside for the Nalco share price.

1. Integrated operations- National Aluminium Company (NALCO) is one of the lowest cost producers of Alumina. It has Bauxite mining capacity of 68,25,000 Tonne per annum in the (North & Central Block) & 31,50,000 TPA (in the South Block). Its Alumina production capacity stands at 22,75,000 TPA (Normative capacity at 21,00,000 TPA). Further it has Power production – 1,200 MW and Aluminium Metal Production capacity of 4,60,000 TPA along with wind Power capacity of 198 MW.
2. Bauxite mine lease extended- The execution of Pottangi Bauxite Mining Lease deed with the State Govt. of Odisha has been executed with the State Government. of Odisha on 13.06.2024 over an area of 697.979 hectares. With 111 million tonnes of estimated reserves, the mine has an annual production capacity of 3.5 million tonnes (MT). This will support future expansions and provide a secure supply of raw materials for NALCO's refinery.

3. Power supply agreement. NTPC, NALCO and NTPC have signed a non-binding Memorandum of Understanding for supply about 1,200 MW or more of uninterrupted power meet NALCO's needs for expanding the capacity of its smelter capacity in Angul, Odisha.

4. Captive Coal: The company ramped up their Utkal block D coal mine to 2 million tons per annum in FY24, consequentially leading to lower power and fuel costs. The current efforts towards starting Utkal block E, will increase the captive coal usage to 4 million tons per year by FY25 and contribute to even more fuel and power cost savings.

5. Alumina expansion: The 1 million ton per annum brownfield alumina expansion is scheduled to commission in second half FY26 and fully ramp up in FY27. From FY26 ahead, more alumina volume will help achieve a greater topline. Over the following few years, a 0.5 mtpa expansion of the aluminum smelter is also planned.

At the current price, the NALCO stock is trading at 10.6 times and 8.6 times its FY25 and FY26 estimated Enterprise Value to Ebitda based on Bloomberg consensus estimate, said analysts at SBI Securities. Ebitda stands for Earnings before interest tax depreciation and amortisation

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