Moneycontrol PRO
Check Credit Score
Check Credit Score
HomeNewsBusinessStocks

Sell National Aluminium Company; target of Rs 29: Emkay Global Financial

Emkay Global Financial is bearish on National Aluminium Company has recommended sell rating on the stock with a target price of Rs 29 in its research report dated June 27, 2020.

July 01, 2020 / 10:38 AM IST
 
 
live
  • bselive
  • nselive
Volume
Todays L/H
More

Emkay Global Financial's report on National Aluminium Company

NALCO wrote back RPO liability worth c Rs1bn during the quarter, which boosted reported EBITDA by 100% in otherwise in-line Q4 earnings. We believe that the company should have disclosed this material write-back in the results. Coal supplies remained smooth, with inventory of over three months. However, Aluminum production remained low at c100kt, owing to pot outages in Q3FY20. We believe that aluminum production could rise in Q1FY21, resulting in higher losses. We note that NALCO has c Rs6.7bn in direct tax liability and c Rs7.2bn in indirect tax liability, which is disputed and there is potential of settlement under the Vivad se Vishwas and Sab ka Vishwas schemes, which can result in substantial cash outflow in future.


Outlook

We cut our FY21/22E EBTDA by 44%/2%, driven by lower LME assumptions, which is offset by lower Re/$ assumptions. We also lower our multiple for the stock from 4.5x to 4x and roll over valuation to Mar-22. We maintain Sell, with a TP of Rs29 (Rs34 previously), with UW in sector EAP. Key risk: Higher-than-anticipated Alumina prices.



For all recommendations report, click here

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

Broker Research
first published: Jul 1, 2020 10:38 am

Discover the latest business news, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!

Advisory Alert: It has come to our attention that certain individuals are representing themselves as affiliates of Moneycontrol and soliciting funds on the false promise of assured returns on their investments. We wish to reiterate that Moneycontrol does not solicit funds from investors and neither does it promise any assured returns. In case you are approached by anyone making such claims, please write to us at grievanceofficer@nw18.com or call on 02268882347