Buy National Aluminium Company; target of Rs 400: ICICI Securities

Key Investment Pillars

• NALCO's Q2FY27 EBITDA grew 25% YoY to INR 24.1bn, supported by higher aluminium realisations, which are expected to remain firm in the near term.
• The company's 1mtpa alumina refinery is progressing towards commissioning, expected by late December 2026 or early January 2027, and will drive the next phase of growth.
• Management expects alumina realisations to improve to approximately INR 35,000/t in H2FY27, with production costs remaining broadly stable despite higher caustic soda and CPC prices.
• The proposed brownfield smelter expansion at Angul, with an estimated investment of INR 170-180bn, provides a longer-term growth avenue, although major capex is expected to commence from FY28-FY29 onwards.

Thesis Validation Checklist

• Investors should watch for the successful commissioning and ramp-up of the 1mtpa alumina refinery, as well as the progress of the brownfield smelter expansion project.
• Alumina realisations and production costs will be key monitors, with management's guidance of INR 35,000/t in H2FY27 and stable production costs being important benchmarks.
• The company's ability to maintain its strong cash position and manage employee expenses will also be crucial in sustaining earnings growth.