NALCO Q1 2024 Earnings: National Aluminium Company (NALCO), India’s state-owned aluminium producer, announced a 76 per cent rise in first-quarter profit, driven by lower production costs and a rebound in aluminium prices.
In the quarter ended June 30, NALCO’s consolidated profit rose to Rs 588 crore on a year-on-year basis. This significant increase in profits was largely attributed to the global surge in base metal prices, including aluminium, which soared during the quarter on supply concerns and rising demand.
Analysts noted that rising commodity prices had a positive impact on the selling price of metals, thereby improving profit margins for mining companies.
The company also benefited from a substantial 35 percent reduction in the cost of thermal coal and bauxite, which are critical raw materials for aluminum production. This reduction in raw material costs contributed to a 24 percent decrease in overheads.
Despite the rise in profits, NALCO reported a 10% decline in revenue from its operations, which totalled Rs 2,856 crore. This decline was mainly due to a 27% drop in its chemicals business, the company’s second-largest segment. Meanwhile, NALCO’s core aluminium business, which accounts for nearly 90% of its total revenue, saw a modest 4% growth during the quarter.
Looking ahead, domestic demand for aluminium is expected to remain robust, driven by the power, construction and building sectors, along with a recovery in demand for consumer durables, according to Sumit Jhunjhunwala, associate vice president and sector head, corporate ratings, ICRA.
NALCO’s competitors are also experiencing similar trends. Rival firm Vedanta (VDAN.NS) recently beat earnings expectations for the first quarter, benefiting from higher aluminium prices. Meanwhile, Hindalco (HALC.NS) is set to release its quarterly results later this week.
Shares of NALCO were down 1.75 per cent at Rs 174.15 apiece on the NSE on Monday, August 12, 2023.
(With contributions from Reuters.)
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