Fundamental Analysis of NALCO

Business Overview:

Company is a Navaratna Central Public Sector Enterprise (CPSE) under Ministry of Mines and is one of the largest integrated Bauxite-Alumina-Aluminum- Power Complex in India and is present in the entire value chain from bauxite mining, alumina refining, aluminum smelting, power generation to downstream products.

Data Source: Screener

Discussion and Analysis

• Low debt of Rs.105 Cr. compared to reserves of Rs.12,320 Cr.

• Dividend yield is good enough.

• The book value is only slightly less than the current market price.

• FCF is decent and is increasing.

Estimated Share Price: In my opinion, the fair market value of NALCO is approximately Rs.200, owing to a better than average incoming cash flow in the year 2022.This is roughly twice than the current market price. Usually, this a good amount of cushion to be protected in case of a downfall.

Opinion: I feel that the company fundamentals are good. The stock is recovering back to the highs of April 2022. Hopefully, we will see a price increase in the near future. Even if the price does not catch up to the expected Rs.200 levels, it is giving better than average dividend yield which can be a passive source of income.

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