Brokerage JM Financial has highlighted National Aluminium Company Limited (NALCO) as one of its top picks for the upcoming Diwali season, specifically for Samvat 2081. The brokerage believes NALCO has robust growth prospects, driven by several key factors, including the expansion of its alumina refinery, rising alumina prices, and cost efficiencies gained from captive coal mining.
As of October 31, 2024, NALCO’s shares closed at ₹227.10 on the BSE, remaining stable with a market capitalization of ₹41,709.91 crore. The stock is trading close to its 52-week high of ₹235.40 and has surged over 154% from its 52-week low of ₹89.38. NALCO’s price-to-earnings ratio stands at 18.04, while its return on equity is around 15.86%.
JM Financial has set a target price of ₹264 for NALCO shares, suggesting a potential upside of 17% within the next 6 to 12 months. The brokerage points out that NALCO is a public-sector undertaking with a government stake of 51.3% as of June 2024. It ranks as one of India’s largest producers of bauxite, alumina, and aluminum, with FY24 production figures of 0.46 million tonnes for aluminum and 2.12 million tonnes for alumina. Additionally, NALCO exported 1.17 million tonnes of alumina during the same fiscal year.
NALCO also has a strong history of rewarding shareholders, having distributed 48 dividends since August 2000. In the past year, the company issued a ₹5 dividend per share, resulting in a dividend yield of 2.2%. The company has a notable record of stock splits and bonus issues, including a 1:2 stock split and a 1:1 bonus issue, both executed in March 2011.
Founded on January 7, 1981, NALCO operates significant facilities in Odisha, including its captive Panchpatmali Bauxite Mines and an alumina refinery in Damanjodi, along with an aluminium smelter and captive power plant in Angul. The company’s strategic focus on expanding production capabilities and enhancing cost efficiency positions it well for sustained growth in the coming years.
Disclaimer: This content is for informational purposes only and should not be considered financial advice. Please conduct your own research or consult with a financial advisor before making investment decisions. The performance of NALCO shares and market conditions can fluctuate, and past performance is not indicative of future results.
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