National Aluminium Co. (NACL IN) – Q2FY27 Result Update – War-led cost strain; LT growth hinges on execution – Upgrade to ‘BUY’
Published on 03 Nov 2026
NALCO delivered a tad weaker operating performance in Q2FY27 on weak LME, sharp jump in input costs mainly caustic soda, CPC and usage of HFO/LDO in rainy quarter. Higher metal volumes and better alumina realisations aided profitability. Metal volumes grew 8% YoY to 121kt, while alumina volumes declined 14% YoY to 340kt amid temporary export dispatch disruptions. EBITDA grew 25% YoY to INR24.1bn, while a sharp increase in raw material and power and fuel costs of 43% and 45% YoY, respectively, limiting sequential margin improvement. Mgmt. expects costs to remain around H1 levels, with some relief from lower fuel consumption and operational efficiencies in H2. As MENA smelters utilisation pick up, excess alumina is expected to get absorbed resulting in improved realizations (US$370-380/t in H2). With global cost curves remaining at higher levels, we expect ally prices to sustain at current levels. We upgrade the stock to ‘Buy’ from ‘Accumulate’ earlier with revised TP of INR385 (from INR392, at same 5x EV/EBITDA).
