IIFL Securities's Stock Idea: Buy National Aluminium Co with Target Rs 249

IIFL Securities recommends a 'buy' call on National Aluminium Co (Nalco) with a target price of Rs 249 per share, representing an upside potential of approximately 3% from the current market price of Rs 241. The brokerage firm cites the company's strong balance sheet and attractive valuations as key factors driving its positive outlook. Nalco, a leading aluminium producer in India, has been benefiting from rising aluminium prices and is expected to continue performing well in the coming quarters.

About National Aluminium Co:

National Aluminium Co. (NALCO), a Navratna PSU under the Ministry of Mines, is a leading producer of aluminium in India. It operates two integrated manufacturing facilities in Angul, Odisha, and a smelter in Jharsuguda, Odisha. NALCO also has a captive power plant and a port facility. The company produces various forms of aluminium, including ingots, billets, extrusions, and foils. NALCO caters to a wide range of industries, including automobiles, aviation, power, building and construction, consumer durables, and packaging.

52 Week Price Trend:

National Aluminium Co's current market price (CMP) of Rs 241.5 reflects a 57% increase from its 52-week low of Rs 75.7, indicating a positive market sentiment. This rally could be attributed to the company's improving fundamentals, such as increased aluminium demand and prices, coupled with cost-optimization measures. Additionally, the company's recent announcement of plans to expand its aluminium production capacity has boosted investor confidence. However, it's crucial to note that the stock is still below its 52-week high of Rs 169.3, suggesting room for further growth potential.

Stratzy's MOST Analysis:

NATIONALUM has received a BBB rating from Stratzy's MOST framework, indicating medium fundamental risks. This assessment is based on an analysis of the company's Management, Outlook, Safety, and Trend. The BBB rating suggests that NATIONALUM has a sound management team, a favorable outlook, adequate safety measures, and a positive trend in its financial performance. However, it also highlights areas where the company could improve to reduce its fundamental risks and enhance its overall financial health.

Company's Fundamentals:

National Aluminium Co (NSE: NATIONALUM), listed on the National Stock Exchange of India (NSE), exhibits key financial metrics that provide insights into its valuation and income-generating capacity. The stock's Price-to-Earnings (PE) ratio of 18.4 indicates that investors are willing to pay 18.4 times the company's annual earnings per share for a share of its stock. The Price-to-Book (PB) ratio of 2.12 suggests that the market value of the company is 2.12 times its book value, indicating potential undervaluation. Furthermore, the Dividend Yield of 2.87% represents the annual dividend paid out to shareholders as a percentage of the current stock price, providing investors with a source of passive income. These metrics highlight National Aluminium Co's overall financial health and valuation, enabling investors to make informed investment decisions.

Fundamental and Technical information provided in this blog were last updated on 06 Nov, 2024

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