Dalal Street market mavens of Dalal Street buy NALCO

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Dalal Street market mavens of Dalal Street buy NALCO

The shares of market mavens of Dalal Street are widely tracked by investors. In the last 12 months, the shares of National Aluminum Co. Ltd. NALCO have been part of Big Bull Rakesh Jhunjhunwala's portfolio.

The stock was up 7 per cent to hit a new intraday high of Rs 96.8 on the Bombay Stock Exchange BSE on Tuesday. The shares have a market value of more than 17 day, 100 day and 200 day moving averages, but they are lower than 20 day and 50 day moving averages.

In the past year, the share price of NALCO jumped from Rs 43 to Rs 96.80 mark, logging around 125 per cent return in this period.

The valuations are attractive and this is the right time to buy the stock. Sonam Srivastava, founder of Wright Research, told BusinessToday that a 20 per cent increase from its current price is expected in the upcoming quarters. Following the Q 2 results, there is a positive and favorable outlook for Nalco, based on the forecast of increased aluminum demand in the near future. She said that aluminum is predicted to see a slowdown in new capacity expansions in China, while demand is expected to remain high.

According to Dr. Ravi Singh, Vice President Head of Research, ShareIndia, Aluminium demand has seen a surge in the consumer sector. In the first half of 2021, NALCO's growth was 783 per cent, due to the high prices of both alumina and aluminum.

The company's sales figures show the strength of the domestic demand recovery. He said that investors may enter long in NALCO around 90 levels for the target of Rs 110-120 in near term.

Investors are keen to take note of inflation and diversifying their assets to hedge inflation. As the lowest cost producer of Bauxite and an aluminum producer, we expect earnings to improve in line with inflation, Divam Sharma, Co-founder, Green Portfolio told BusinessToday. He noted that NALCO has an attractive valuation of 11 x price free cash flow when Hindalco is exchanged at double that valuation, compared to its peers.

The latest drive to privatize NALCO and Hindustan Copper will help in unlocking value for existing investors, according to Sharma.

Earnings Q 2

NALCO posted stellar earnings for the quarter ended September 2021. The company reported a sevenfold increase in its net profit at Rs 748 crore for the quarter ended September 2021, more than sevenfold increase in the company's net profit.

Profit was 107 crore in the year-ago period. The total income increased to Rs 3,592 crore from Rs 2,375 crore in the year-ago period.

This is a new investment by Dalal Street veteran Rakesh Jhunjhunwala whose name was not included in the list of big shareholders in the previous shareholders' data.

According to the shareholding pattern for September 2021, Rakesh Jhunjhunwala had a 1.36 per cent stake or 2,50, 00,000 shares in the company.

Nalco is a Navratna CPSE under the Ministry of Mines. The company has diversified operations in mining, metal and power.