SBI Securities has issued a 'Buy' rating for NALCO with a target price of ₹420.9, representing significant upside potential from the current market price of ₹367.15. According to reports from The Hindu BusinessLine, the brokerage maintains a positive outlook on the integrated aluminium producer, citing the company's aggressive expansion strategy and operational improvements.
The company is pursuing an ambitious 0.5 million tonnes per annum (mtpa) capacity expansion, with detailed project reports expected to be ready by June/July 2026. As reported by The Hindu BusinessLine, groundwork and capital expenditure are anticipated to commence from FY27, with commissioning targeted around December 2030. The estimated combined capital expenditure for this expansion stands at ₹30,000 crore. The new 1-mtpa refinery is expected to start commissioning in June 2026, with full capacity stabilization targeted by December 2026, though a realistic production target of 0.3 mtpa is aimed for FY27.
NALCO currently operates with significant production capacities across multiple segments. According to the report, the company's bauxite mining capacity stands at 68.25 lakh tonnes per annum (tpa) across North and Central Blocks, and 31.5 lakh tpa from South Block. The alumina production capacity is 22.75 lakh tpa with a normative capacity of 21 lakh tpa, while aluminium metal production capacity is 4.6 lakh tpa. Additionally, the company operates 1,200 MW power production capacity and 198 MW wind power capacity.
The company has successfully ramped up production at its Utkal D coal block to 2 mtpa in FY24, helping reduce power and fuel costs significantly. As reported by The Hindu BusinessLine, for FY26, NALCO targets producing 4 mtpa from the Utkal D & E blocks, which is expected to generate cost savings of ₹200-250 per tonne. The power plant requires approximately 7.2 mtpa of coal for operations.
For FY26, NALCO plans to incur capital expenditure of ₹1,700 crore, which is expected to increase to ₹1,800-2,000 crore in FY27. At the current market price, the stock trades at 7.6x/7.2x of its FY26E/FY27E EV/EBITDA based on Bloomberg consensus estimates. The company is positioned as one of the lowest-cost producers of alumina in the integrated aluminium sector.
