Neutral NALCO; target of Rs 350: Motilal Oswal

What happened

Motilal Oswal reiterated a Neutral rating on NALCO and set a target price of Rs 350. Revenue in 2QFY27 rose 26% year over year to INR54b, while consolidated EBITDA, a measure of operating earnings, was INR24b; higher energy costs contributed to an 11% quarterly decline.

Confirmed

Global impact / market context

Revenue growth was supported mainly by favorable alumina prices, while muted aluminum prices limited support and higher energy costs reduced operating earnings from the prior quarter. If energy costs remain high or alumina prices weaken, earnings could face pressure; the report’s Neutral stance signals no strong expected upside or downside.

Analyst inference

The report says NALCO trades at 4.3 times estimated FY28 enterprise value to EBITDA, a comparison of company value with operating earnings. Motilal Oswal values it at five times that measure and maintains Neutral, implying its target rests on a higher valuation multiple.

Confirmed

What to watch

1. Check whether subsequent reports show alumina prices continuing to support revenue and whether aluminum prices remain muted, since the article identifies both as key sales drivers. Analyst inference
2. Watch quarterly energy costs and operating earnings: the article reports higher energy costs and an 11% quarter-on-quarter EBITDA decline, but gives no forecast for either. Confirmed
3. Compare NALCO’s later share price with the Rs 350 target and review whether Motilal Oswal changes its Neutral rating or FY28 valuation assumptions. Analyst inference

Evidence

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