NALCO: Zero Debt, Rs 10,500 Crore Cash and a 3.5% Dividend

NALCO (NSE : NATIONALUM) is a Navratna PSU operating one of India’s largest integrated Bauxite-Alumina-Aluminium-Power complexes. Its alumina refinery produces 21 lakh tonnes per annum and its smelter has a capacity of 4.6 lakh tonnes per annum. What happened: In FY26, NALCO reported revenue of Rs 17,843 crore, up 6.3% YoY. The aluminium division contributed 72.4% of revenue and chemicals 27.4%. EBITDA rose 8.7% to Rs 8,613 crore, with margins improving from 47.2% to 48.3%. Net profit grew 9.2% to Rs 5,816.8 crore. The company declared a dividend of Rs 11.5 per share, translating to a 3.5% yield at the current price of Rs 324. Why it matters: NALCO holds Rs 8,407.7 crore in cash as of March 2026, rising to over Rs 10,500 crore by June 2026, with zero long-term debt. Operating cash flow reached Rs 6,438 crore in FY26, generating free cash of Rs 4,413 crore after Rs 2,025 crore in capex. Over five years, revenue has grown at a 15% CAGR and net profit at 35%. DIPAM mandates a minimum payout of 30% of PAT or 4% of net worth; NALCO has consistently paid over 35%. What I am watching: NALCO is expanding its alumina refinery from 21 to 31 lakh tonnes. India’s per capita aluminium use is 3.4 kg versus the global average of 12 kg; domestic consumption grew 11.4% in FY26. NALCO holds a 40% stake in KABIL, a JV securing lithium mining rights in Argentina. Free cash fell from Rs 4,641 crore in FY25 to Rs 4,413 crore in FY26 on higher capex; how this trend evolves will matter. My stance: The balance sheet is exceptional and the dividend track record is reliable. Aluminium is cyclical; the FY23 dividend dip to Rs 4.5 per share is a reminder. The refinery expansion makes sense if demand holds up. I do not hold a position in NALCO at the time of writing. This is not investment advice.