Buy Nalco; target of Rs 100: Kotak Securities

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Kotak Securities' research report on NALCO

US sanctions on Rusal (April 2018) and alumina cost push led to ~10% rise in the aluminium prices since Feb’18 end. Besides, supply disruptions, the sanctions also restrict Rusal’s ability to complete new projects or ramping up of exiting capacities (1.5-1.6MT), restricting any new supply coming into the market. This, coupled with China’s emphasis on environmental sustainability should support aluminium prices in the near to medium term.

Outlook

While we continue to assess the development, a positive impact on aluminium and alumina is apparent in the near term. At current valuation of 5.0x/4.7x FY19E/FY20E EBITDA, the stock is trading at attractive level. We continue to maintain our BUY rating with an unchanged target price of Rs100.For all recommendations report, click here

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