National Aluminium Co. (NACL IN) – Q2FY26 Result Update – High LME & lean cost structure to drive growth – BUY
Published on 08 Nov 2025
National Aluminium (NACL) delivered a strong operating performance in Q2FY26, driven by higher alumina inventory liquidation, improved metal realization and lower power & fuel costs. Alumina volumes rose 39% YoY to 396kt, while metal volumes declined 7% YoY to 112kt on weak domestic demand amid monsoon quarter. Alumina NSR eased 4% QoQ to USD404/t, whereas metal average realization improved 5% QoQ to USD 2,938/t. Cost tailwinds were visible with lower employee and P&F costs; aided by superannuation-led employee count reduction and higher captive coal. Mgmt. reiterated commissioning of 1mtpa alumina refinery and Pottangi bauxite mine by Jun’26, driving incremental alumina volumes from FY27.
Captive coal mines are ramping up well and are expected to meet up ~57% of coal requirement. Over the years NACL has improved its cost structure by adding captive coal mines and driving structural cost reduction measures. However, volume growth is missing in the near term due to its weak execution and NACL remains pure play on alumina/metal prices. We raise FY27/28E EBITDA by 4% each assuming higher LME prices of USD2,742/2,666 respectively. Maintain ‘Buy’ with revised TP of Rs281 (from Rs280, assigning same 5x EV/EBITDA multiple). At CMP, the stock is trading at 4.4x/3.7x EV of FY27/28E EBITDA.
