Q1 FY13 topline of Rs17.5bn was marginally lower both on a qoq and yoy basis.

January 01, 1970 5:30 IST | India Infoline News Service
CMP Rs53.5, Target Rs52, Downside 2.7%
  • Q1 FY13 topline of Rs17.5bn was marginally lower both on a qoq and yoy basis. Production of aluminium and alumina was lower on a qoq basis due to issues regarding availability of bauxite and coal. Alumina production declined 6.7% qoq to 476,000 tons due to lower availability of bauxite. Bauxite mining was impacted due to heavy rains in the region. Aluminium production remained subdued inline with the management strategy of selling alumina externally. Alumina and Aluminium realizations were higher due to higher premiums and depreciation of the Rupee. 
Quarterly production and sales trend
  Q1 FY13 Q4 FY12 % qoq Q1 FY12 % yoy
Alumina 476,000 510,000 (6.7) 400,000 19.0
Aluminium 103,000 104,000 (1.0) 109,630 (6.0)
Alumina 253,000 274,000 (7.7) 183,000 38.3
Aluminium 103,000 107,000 (3.7) 109,000 (5.5)
Source: Company, India Infoline Research 
  • On a segmental basis, aluminium division revenues declined 1.2% qoq, as the impact of higher realisations was offset by a decline in aluminium sales. Alumina division revenue too declined by 2.1% qoq due to lower production. Revenue from power division improved marginally at Rs5.2bn. Alumina realisation for the quarter stood at US$341/ton.
  • Operating profit of Rs3bn was marginally lower than Rs3.1bn achieved in Q4 FY12 and our estimate of Rs3.3bn. The underperformance was largely due to lower alumina sales and a jump in power costs. Power costs for the company jumped on qoq basis despite a marginal decline in aluminium production. The increase was largely due to the lower availability of linkage coal, price hike taken by Coal India and higher consumption of e-auction coal. Employee costs increased by 10.9% qoq to Rs2.8bn. The impact of lower other expenditure and raw material costs was offset by a jump in power costs. On a segmental basis, aluminium division contnued to register an EBIT loss of Rs0.2bn, marginally higher on a qoq basis.
  • The company has awarded the R&R contract for the Utkal coal block while the land acquisition process is still progressing. The company has guided for a total capex of Rs23bn for FY13.
  • NALCO would remain an underperformer hence forth on account of higher coal costs, uncertainty over global financial health and slower ramp up in alumina refinery. We reduce our volume estimates for FY12 and FY13 incorporating the management strategy of keeping aluminium smelter pots idle and slower ramp up in new refinery. At the current price of Rs53.5, the company is trading at 6.3x FY13 EV/EBIDTA, which is inline with its peers. We maintain our Market Performer rating on the stock with a revised 9-month price target of Rs52.
Result table
(Rs m) Q1 FY13  Q4 FY12 % qoq Q1 FY12 % yoy
Net sales 17,481 17,845 (2.0) 17,625 (0.8)
Material costs (2,462) (3,374) (27.1) (1,548) 59.0
Power and fuel costs (6,046) (5,089) 18.8 (4,808) 25.8
Personnel costs (2,835) (2,556) 10.9 (2,465) 15.0
Other overheads (3,096) (3,759) (17.6) (2,639) 17.3
Operating profit 3,042 3,067 (0.8) 6,166 (50.7)
OPM (%) 17.4 17.2 22 bps 35.0 (1,758) bps
Depreciation (1,224) (1,232) (0.7) (1,019) 20.0
Other income (32) (8) 317.1 - #DIV/0!
PBT 1,403 1,594 (12.0) 1,254 11.9
Tax 3,190 3,421 (6.7) 6,401 (50.2)
Effective tax rate (%) (959) (1,239) (22.6) (1,776) (46.0)
Adjusted PAT 30.1 36.2   27.7  
Adj. PAT margin (%) 2,231 2,182 2.3 4,625 (51.8)
Extra ordinary items 12.8 12.2 54 bps 26.2 (1,348) bps
Reported PAT - 639 - - -
Ann. EPS (Rs)* 6.9 6.8 2.3 7.2 (3.5)
Source: Company, India Infoline Research, *adjusted EPS
Segmental performance
  Q1 FY13 Q4 FY12 yoy chng Q1 FY13

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