- Strong LME Prices Support

NATIONALUM

’s Margins

. (Nalco) has rallied over 8% since the West Asia conflict began, benefiting from supply disruptions that lifted aluminium prices to $3,400/tonne on the LME, the highest since May 2022. While strong aluminium prices have boosted earnings, alumina weakness and limited production headroom temper near-term upside. Nalco’s fundamentals remain robust, supported by zero debt, cost efficiencies, and expansion projects. Global Context - Aluminium Bahrain declared force majeure on shipments due to Strait of Hormuz disruptions. - Qatalum (QatarEnergy–Norsk Hydro JV) partially shut operations amid gas shortages. - West Asia contributes 8–9% of global aluminium output, exporting ~75% of production. - Kotak Institutional Equities sees upside risk to deficit estimates for CY2026–28, with base-case LME aluminium at $2,900/tonne for FY27–28. Nalco’s Performance (9MFY26) - EBITDA growth: +16% YoY. - Aluminium EBIT: +40%, offsetting alumina EBIT decline (-14%). - Alumina contribution fell from 40% of EBIT in FY25 to 31% in 9MFY26. - Alumina prices now ~9% of LME aluminium spot price, vs. long-term average of 16%, reflecting surplus pressures. Operational Outlook - Aluminium sales volumes expected to grow 2% YoY in FY26. - Alumina sales target: 1.3 mt in FY26 (+12% YoY). - 1 mtpa alumina expansion project with associated bauxite mine to be commissioned by June, though muted alumina prices may limit gains. - Cost relief: Coal mines at full capacity in Q3FY26; employee costs down 9% in 9MFY26 after a 12% drop in FY25. Valuation & Risks - Stock has more than doubled in the past year. - Trades at 7–7.5x FY27E EV/EBITDA. - Upside capped by limited production headroom, trade tensions, execution challenges, and regulatory risks. - Despite near-term constraints, Nalco remains structurally well placed given strong aluminium demand from EVs, solar, and infrastructure.