Dalal Street Investments

NALCO – End of Commodity Boom ?

August 21, 2008

National Aluminium Company Limited (NALCO)’s net sales jumped 25.9% yoy to Rs. 14.7 bn on the back of higher realisations and increased sales volumes. Adj. net profit increased 17.6% yoy to Rs. 5.3 bn, restricted by higher employee expenses and power & fuel costs. EBITDA increased 19.5% yoy to Rs. 7.4 bn. The increase in EBITDA was restricted by a 27.2% increase in power & fuel costs, primarily due to the shortage of coal being witnessed by the Company.

The Company is already operating at 100% capacity utilization for alumina and 104% for aluminum. Thus, with no additional capacity expected in FY09, we expect volume growth to be marginal. Volume growth for FY09 is expected to be 1.7%. In FY10, the management expects volumes to increase 15% yoy on the back of new capacity expected to be commissioned by the end of FY09.

NALCO is expected to report an EPS of Rs 27.3 for FY09.


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