Motilal Oswal has given Buy recommendation for Nalco recommended buy rating on the stock with a target price of Rs 107 in its research r with a target price of Rs. 107 in its research report issued on Aug 08, 2021
Motilal Oswal’s research report on Nalco
NALCO’s 1QFY22 result was below our expectations due to higher than expected costs and miss on volumes/realization. EBITDA/adjusted PAT declined by 38%/45% QoQ to INR8.9b/INR3.5b and missed our estimate by 34%/38%. We lower our FY22E EBITDA estimate by 10% to factor in higher costs. However, we raise our FY23E EBITDA estimate by 15% as we revise upwards our FY23E LME aluminum assumption by 7% to USD2,300/t. We maintain our Buy rating.
We value the stock on a SoTP basis at 5x FY23E EV/EBITDA and at 0.75x book value for growth CWIP to arrive at our TP of INR107. At the CMP, it provides an attractive dividend yield of ~5%. We maintain our Buy rating.