NALCO

The stock did very well on the back of the exuberant set of numbers it posted for Q3FY13. The PSU posted a two-fold jump YoY rise in its net profit at Rs.119 crore. This was a whopping 25 times rise on QoQ. The performance was on the back of very good net sales, up 17% at Rs.1670 crore. The jump in topline and bottomline was led by better realisations form its chemical division, which showed a 16% jump in revenue. Aluminium still remains its mainfray, contributing over 76% to the topline and this division showed a 13% rise in revenue. Its third division, electricity, also did well, showing a 5% rise in revenue. But on the EBIT front, all three units did not deliver well – aluminium showed a loss of Rs.22 crore on EBIT level while EBIT of Chemical unit was down 5% and that of electricity was down 12%. What really helped shore the bottomline was the over 4 times jump in other income at Rs.113 crore.

For 9MFY13, the company produced 1. 27 million tonne (MT) of alumina hydrate v/s 1. 17 MT on YoY and metal production was slightly less at 305,000 tonnes v/s  309,000 tonnes on YoY. This is a credible performance give the fact that its alumina production was affected due to lower bauxite availability as its Panchpatmal bauxite mining operations were temporarily shut down due to expiry of mining lease. Over 36% of its total operating cost is on power and fuel. The company is unable to get sufficient coal linkages from the Mahanadi Coal Field and this has bloated the cost as it has to depend on high cost e-auction and imported coal. Till its Utkal coal block is not commissioned, its fuel costs will be high. It has till date received stage I forest clearance and commissioning of Utkal is what will boost profitability. Divestment news could be the big trigger for the stock in coming days. The government holds 87.15% stake in the company.