At a Glance
Despite clocking a 108% 5-year profit CAGR, 52% operating margins in Mar ’25, and a solid 4.3% dividend yield, National Aluminium Company Ltd (NALCO) still trades at a humble 6.4x earnings. PSU tag? Maybe. Investor apathy? Definitely. Let’s decode this aluminium giant’s silent 5-year domination.
🥇 TL;DR:
- Revenue Growth (FY20 to FY25): ₹8,472 Cr → ₹16,788 Cr
- PAT Growth: ₹136 Cr → ₹5,268 Cr (That’s not a typo)
- Dividend: 4.3% yield with consistent payouts
- Valuation: P/E ~6.4x, Book Value ₹97
- FIIs: Ditching it. DIIs: Scooping it.
🔹 The Aluminium Godfather (But With PSU Glasses On)
NALCO is one of Asia’s biggest integrated producers of alumina and aluminium. From mining bauxite to smelting aluminium, it’s vertically integrated like a Marwari wedding setup.
But unlike Hindalco or Vedanta, NALCO never got that glamour tag. Why?
- PSU tag = retail investor fear
- Earnings too cyclical = analyst fear
- No “growth story” = DII-only love story
Yet, when you zoom out and look at FY21 to FY25:
| Metric | FY21 | FY25 |
|---|---|---|
| Revenue (₹ Cr) | 8,956 | 16,788 |
| PAT (₹ Cr) | 1,299 | 5,268 |
| EBITDA Margin | 20% | 45% |
| ROCE | 13% | 44% |
🏠 Business Breakdown
✅ Integrated PSU Powerhouse
- Bauxite Mining → Alumina Refining → Aluminium Smelting
- Power Source? Captive thermal plants
📈 Revenue Segments
- Alumina (Export + Domestic)
- Aluminium (Primary Metal)
- Power Sales (Grid sales + Internal)
This vertical integration helps buffer against raw material shocks, and the in-house power keeps costs low.
📊 5-Year Financial Glow-Up
🔥 Profit Boom
NALCO’s net profit in FY25: ₹5,268 Cr. That’s nearly 40x from FY20 lows.
- Massive operating leverage
- Global aluminium prices rally
- Better export realisations
🥇 OPM Goes Brrrrr
From 6% in COVID-hit FY20 to 52% in Q4 FY25. Even HUL doesn’t get these margins.
📈 EPS Growth
- FY20: ₹0.73
- FY25: ₹28.68
That’s a CAGR of 103%. Tech startups would kill for this.
🚫 But… FIIs Running for the Hills?
🚫 FII Holding:
- June ’22: 16.7%
- March ’25: 15.8%
📈 DII Holding:
- June ’22: 10.1%
- March ’25: 15.7%
Why the cold shoulder?
- PSU baggage
- Global metal cycle fears
- Low free float appeal
💸 Dividend Story
NALCO consistently pays out 40-60% of its profits.
- FY25 DPS: ₹8
- Yield: 4.3%
- Great for passive income lovers, if you can tolerate PSU mood swings
🧠 Fair Value Calculation (Conservative)
| Metric | Value |
|---|---|
| EPS (FY25) | ₹28.7 |
| Fair P/E Range | 8x – 11x |
| Fair Value Range | ₹230 – ₹315 |
Current Market Price: ₹184 → Upside Potential: 25% to 70%
📆 FY26 Outlook: Not All Sunshine
Management has guided for:
- EBITDA Margins: ~36% (down from 52% peak)
- Alumina production: Up 2 lakh tonnes
- New Refinery: Delayed to FY27
So FY26 will likely cool off, but the base is still strong.
🌟 EduInvesting Verdict:
NALCO is a PSU that delivers like a private player but trades like it’s still stuck in 2014.
- 6x PE, 4% yield, 108% profit CAGR?
- Retail investors: Meh.
- Reality: This might be India’s most boring multibagger in disguise.
✍️ Written by Prashant | 🗓️ June 21, 2025
Tags: NALCO, PSU Stocks, Aluminium Stocks, Dividend Yield, Metal Sector, EduInvesting, Value Investing, Hindalco Peer, 5-Year Recap, NSE Stocks
