NALCO Share price target 2022, 2023, 2024, 2025, and 2030: In this article, you will learn about NALCO share price target 2022, 2023, 2024, 2025, and 2030, along with the fundamentals and financials of the company.
For every investor, it is important to know about the company in which they are investing, to get the confidence to hold the stock for the long term To make it clear for you, in this article we have mentioned NALCO share price target 2022, 2023, 20254, 2025, and 2030, along with the fundamentals of the company.
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NALCO: Company Profile
NALCO is one of the largest integrated Bauxite-Alumina-Aluminium- Power Complex in the Country. At present, the Government of India holds 51.28% of paid-up equity capital. The Company has been operating its captive Panchpatmali Bauxite Mines for the pit head Alumina refinery at Damanjodi, in the District of Koraput in Odisha and Aluminium Smelter & Captive Power Plant at Angul. As a part of the green initiative, NALCO has installed 198 MW Wind Power Plants at various locations in India and 800 kWp rooftop Solar Power Plants at its premises to join hands for carbon neutrality.
From the days of the first commercial operation since 1987, the Company has continuously earned profits for the last 34 years. Despite the Global COVID-19 pandemic, NALCO has posted an impressive net turnover and net profit of Rs.8,869.29 crore and Rs.1,299.56 crore respectively in FY20-21. Globally, NALCO has achieved the distinction of being the lowest cost producer of Bauxite and Alumina in the world as per the latest report of Wood Mackenzie.
The Company has a 68.25 lakh TPA Bauxite Mine & 21.00 lakh TPA (normative capacity) Alumina Refinery located at Damanjodi in Koraput district of Odisha, and 4.60 lakh TPA Aluminium Smelter & 1200MW Captive Power Plant located at Angul, Odisha.
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Share Holding Pattern
NALCO Share Price Target 2022
During the year 2020, the total world production of Metallurgical Grade Alumina (MGA) was 127.01 Million Tonnes, registering an increase of about 2.55% compared to 123.85 Million Tonnes produced during 2019. Alumina consumption during 2020 was 126.77 Million Tonnes as against 123.26 Million Tonnes consumed during 2019, exhibiting a YoY increase of 2.85%. China was the major contributor in both production and consumption, having a 53.98% share in production and 57.05% share in consumption of Alumina. World MGA demand is expected to be 130.65 Million Tonnes in 2021, representing a YoY increase of 3.06%. Overall, the Alumina market is expected to remain in a surplus of 1.23 Million Tonnes in 2021 with an expected production of 131.88 Million Tonnes.
Total Alumina production in India during the Financial Year 2020-21 was 65.99 Lakh Tonnes, thereby registering a YoY decline of 0.55%. Out of this, NALCO’s contribution was 20.59 Lakhs (31.20%). During FY 2020-21, the aluminium price rally has not been complemented with a corresponding increase in alumina prices, the rally in aluminium prices will have a positive impact on NALCO which results in an increase in NALCO share price target 2022. and alumina price remains weighed down by a well-supplied market and high alumina freight costs between Western Australia and China.
This has caused contrasting fortunes in the margins between both industries. Freight rates have spiked this year due to several reasons, mainly the low availability of containers, congestion at ports, rising demand for consumer electronics and other white goods and delays caused by the Suez Canal blockage. The tight freight situation is expected to continue till Q4 (October-December, 2021), with congestion in containers to remain for the remainder of 2021. NALCO share price target for 2022 is Rs 150.
|NALCO share price target 2022|
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Strengths of NALCO
The strength of a company is something that helps the company to grow in the long run and also helps to earn maximum profits with their full use of resources efficiently.
- Essential Goods Producer: NALCO produces Bauxite & Aluminium which is a major raw material for refractory bricks, abrasive, cement, steel, and petroleum. The product ensures never-ending sales and increasing revenue.
- Strong Performers in the Market: The company has a rating of its stocks more than 50-55 across the durability, valuation, and momentum (DVM). The company being under government can give profits in future.
- Huge Power Producer: NALCO is one of the biggest power producers in the nation. NALCO has already commissioned 198 MW wind power plants and 50 MW wind power plants are further in pipeline, making NALCO the highest producer of renewable energy among PSUs.
- Quality of Metal Production: NALCO maintains its production much more efficiently than its competitors by which it can produce metal of the perfect quality.
- Skilled Employees: Their staff contributes significantly to the success of NALCO. They want to attract and retain talented people in their company and support them in their development.
- Code of Conduct: NALCO believes that the well-being of everyone is everything. This is in their core value of “respect” for individuals and the environment. NALCO directs its investment in three areas including Agriculture/Animal Husbandry, Health Care (Primary) and Education.
- Sustainability: NALCO ensures environmental stewardship including energy and water efficiency, waste management, renewable energy and greener manufacturing processes and technologies. The company is driven by the spirit of innovation and is continuously focusing on sustainable products and packaging innovations.
- Brand Reputation: NALCO has been in the business of producing metal, aluminium, power, and rolled products for a large number of years. Also, with the variety of products and services it provides, it is established as a leader in the industry. This helps the corporation to gain a reputation and get recognized easily.
- Dealer Community: NALCO has built a very strong relationship with its dealers that not only helps in supplying the products but also promotes the company’s core products and training.
- Financial Position: NALCO has a very strong financial position in the market with consecutive profits over the years along with accumulated profit reserves which can be utilised for future expenditures or marketing activities.
Weaknesses of NALCO
The weaknesses are a major drawback that stops the organisation from performing at its optimum level. They are the areas in which businesses can make improvements. The major drawbacks are as follows:
- Scattered Plant Sites: Some of the plant sites of NALCO are scattered and do affect the production. NALCO can make production much more efficient if it maintains the sites properly.
- Depends on LME Quotes: All the prices of metals are dependent on the London Metal Exchange (LME) quotes.
- Research and Development: NALCO has a good share of expenditure on the research and development department but it is spending way less than a few of the players within the industry which have benefitted as a result of their innovative products.
- Diversity in the Workforce: The local workers contribute to the majority of the workforce at NALCO making it difficult for outsiders to adjust and hence resulting in the loss of talent.
- High Employee Turnover Rates: NALCO has a very high employee turnover rate as compared to its competitors which means it spends a lot on training activities as employees keep leaving and joining.
- Need to Invest More in New Technologies: According to the country’s scale of expansion and the geographical areas NALCO needs to invest more money in technology to integrate the processes across the board. Currently, the investment in technology is not on par with the vision of the company.
- Limited Success Across the Core Business: Although NALCO is one of the leading organisations in its industry it faces challenges in moving to other product segments with its present culture.
Opportunities of NALCO
Opportunities are the favourable external factors that may give the organisation a competitive advantage over others. The opportunities of NALCO are as follows:
- Social Media: Over the years the number of active users on social media channels has increased and with this NALCO can make use of its social media handles to promote its products, and interact with customers and even provide after-sale services.
- Transport Industry: The transport industry has been booming and is expected to boom in the next few years as well which has resulted in more demand for NALCO products which is helpful for NALCO to scale its business.
- Globalisation: Increased globalisation doesn’t restrict NALCO anymore to conducting activities in its own country which can act as an opportunity to extend operation in other countries and thus enter new markets and unleash the potentials of other new markets.
- Population: The population has been growing and is expected to grow at a positive rate in the upcoming years. This is beneficial for Nordea as there will be an increase in the number of potential customers that it can target.
- Expansion to Other Global Markets: The company is planning to expand its international activities with a particular focus on Asia. This serves them as an opportunity to acquire a new customer base.
Threats of NALCO
Threats are those factors that have the potential to provide harm to the organisation in any form. The threats of NALCO are as follows:
- Instability of the LME Prices: As we discussed earlier the NALCO is highly dependent on the prices of the London Metal Exchange (LME). It can be a threat to the company as the prices can fluctuate at any time and can make high losses to the company.
- High Task Rate: The sale of the company can affect if a high task rate is imposed on the metal and it will result in price maximisation of the products.
- Dumping of the metal at low cost by the European countries: If the European countries dump metal at low cost then the value of the metal will decline heavily and it can harm the market of the companies like the NALCO.
- Competitors Catching up with Product Development: The growth of the mining sector has produced many competitors to NALCO and they have been catching up with the market trends very gracefully. This can be a threat to the future of the company.
- Government & Environmental Regulations: The government has slightly different and more strict laws for the mining industry and to maintain their control over the consumption of natural resources. While on the other hand organisations concerned about the environment also have their eyes on the mining industry due to its threat to natural resources and the environment.
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NALCO Share Price Target 2023
World production of Aluminium during the year 2020 was 64.76 Million Tonnes, registering a rise of 2.44% compared to production figures of 63.22 Million Tonnes achieved in 2019. At the same time, worldwide consumption of Aluminium shrank 2.74% from 64.57 Million Tonnes in 2019 to 62.80 Million Tonnes in 2020. The market, thus, registered a surplus of around 1.96 Million Tonnes during 2020. China was the largest producer as well as a consumer during the year, contributing 56.67% share (36.70 Million Tonnes) of the world production and 60.14% (37.77 Million Tonnes) of the world consumption of Aluminium. China registered Aluminium production growth of 3.98% during 2020, while the rest of the world exhibited a meagre 0.48% growth in production.
As far as Aluminium consumption is concerned, China’s figures displayed a robust growth of 4.31% during 2020, while the rest of the world registered a contraction of 11.74%. During FY 2020-21, consumption of Aluminium in India fell by 7.92%. The average LME Cash Settlement Price during the financial year 2020-21 was USD 1,802 per MT, rising 3.03% against the corresponding figure of USD 1,749 per MT during 2019-20. The price has gained further during the first quarter of FY 2021-22.
Estimated global Aluminium stocks at the end of Financial Year 2020-21 stood at 13.16 Million Tonnes, registering a growth of 4.86% against stocks of 12.55 Million Tonnes at the end of FY 2019-20. By considering the consumption of aluminium in the future, NALCO share price target for 2023 is Rs 185.
|NALCO share price target 2023|
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NALCO Share Price Target 2024
Strengths of Aluminium: Aluminium is the most abundant mineral on earth behind oxygen and silicon, making it the most abundant metal naturally found on the planet and the second-most used metal globally, behind only Iron. It is largely used as an alloy, even if the aluminium content is as high as 99%.
Aluminium is one of the most ubiquitous metals in the modern world, thanks to properties like high strength-to-weight ratio, high thermal and electrical conductivity, atmospheric corrosion resistance, workability and formability. These properties make it an ideal choice in applications as varied as the aerospace and construction industries, high-tech electronics, high voltage power lines and more. These characteristics, along with its high recyclability, help improve life cycle management and reduce the overall economic and environmental impact of its application. India is the third-largest producer of Aluminium after China and Russia. India also holds a fair advantage in the cost of production and conversion costs in alumina.
Moreover, the rise in infrastructure development and automotive production in the long term are encouraging developments in this sector within the country. The Indian aluminium industry mainly consists of primary aluminium, aluminium extrusions, aluminium rolled products and alumina chemicals. Apart from these, India also has a sizeable secondary aluminium sector, which deals with the recycling of Aluminium metal. While extraction of primary Aluminium from its ore requires high energy consumption, its recycling involves only a fraction of this energy cost. Recycling of aluminium can be done over and over again, without any adverse impact on quality and performance. By considering all the above-mentioned factors, NALCO share price target for 2024 is Rs 220.
|NALCO share price target 2024|
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NALCO Share Price Target 2025
The Aluminium industry meets the requirements of a wide range of industries including engineering, electrical and electronics, automobile and automobile components etc. The principal user segment of the aluminium industry in India continues to be the electrical and electronics sectors followed by automotive, transportation, building, construction, packaging, consumer durables, industrial and defence. 100% FDI is allowed in the mining sector under the automatic route to explore and exploit all non-fuel and non-atomic minerals. According to data released by the Department for Promotion of Industry and Internal Trade (DPIIT), Indian metallurgical industries attracted Foreign Direct Investment (FDI) to the tune of US$ 13.4 billion in the period April 2000 to March 2020.
Some of the other weaknesses that hound the Indian Aluminium industry are:
- Most of the metal produced is being exported without any value addition in the absence of a robust Aluminium ecosystem, which could encourage development of a sizeable downstream industry.
- Lack of investment in development of innovative products that could open avenues for Aluminium to be used in new applications or increase the usage of Aluminium in existing applications.
- Multiple bottlenecks in logistics restrict free flow of raw materials to and finished goods from the production facilities. Investments in infrastructure development are desirable to mitigate this constraint.
- Higher cost of production of metal due to dependence on coal-based power, which also comes with cost overheads like high electricity duty, coal cess etc. Also contributing to high cost are high import duties on critical raw materials like Aluminium Fluoride, CP Coke and Caustic Soda which puts domestic aluminium producers at a disadvantage.
- High dependence on imported Aluminium scrap due to inadequate Aluminium scrap generation and handling infrastructure to cater to scrap requirements of Aluminium recyclers.
The above mentioned are the weaknesses for an aluminium company, but still, as per our research and analysis, we remain positive on aluminium companies in the long run by considering the strengths and opportunities aluminium companies have in the future. NALCO share price target for 2025 is Rs 270.
|NALCO share price target 2025|
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NALCO Share Price Target 2030
Opportunities: Aluminium is a vital lightweight metal used in many areas of applications in both industrial and consumer sectors. On the industrial front, the metal is primarily used in machinery, electrical power transmission equipment, construction and transport. As the sectors grow, aluminium consumption will increase which is a positive thing for NALCO and will have a positive impact on NALCO share price target in the long run.
For India, the aluminium industry is considered a key player in boosting fuel and cost efficiency, especially in the transportation, electrical & electronics and building & construction sector. As per the NITI Aayog report of 2018, aluminium will help India to achieve its CO2 emissions target by adopting electric vehicles, which will improve the share of renewable energy to 40 per cent or more. The per capita Aluminium consumption in India is around 2.7 kg, which is far below the global average of 11 kg.
In future, India will require additional annual consumption of 16 Million Tonnes of aluminium, thus, making it the second-largest consumer in the world. Even at low consumption, aluminium contributes to 2% of Gross Domestic Product (GDP) in the manufacturing sector (steel 12%, cement 9%) and this is expected to move up with consumption growth. This growth is critical for India’s industrial vision of achieving 25% of GDP from manufacturing by 2022. The aluminium industry also has a high direct and indirect employment multiplier creating close to 8,00,000 jobs in India.
Plants are generally based in the hinterlands of the country and aid in generating peripheral employment and development of the region. Going forward, the sector will be a key contributor to the Government’s key flagship programs like Make in India, National Capital Goods Policy, Development of 100 smart cities and Government’s commitment to reach a 100 GW solar capacity by 2022 (Source: NITI Aayog Report, 2018). In the short term, due to lockdown and recovery from COVID-19, domestic demand is likely to decline, due to a slowdown in Transportation, Building & Construction, Industrial Equipment and Consumer Durables.
Demand for aluminium is expected to pick up as the scenario improves for user industries like power, infrastructure and transportation. The Government of India’s “National Mineral Policy” is expected to bring more transparency, better regulation and enforcement, balanced socio-economic growth along with sustainable mining practices in the aluminium sector. Domestic demand is likely to remain robust driven by construction and packaging. The Indian Government has plans to invest over US$ 1 billion in its “Make in India” initiative. The aluminium industry will benefit from this, as there is a great demand to build new production facilities. By considering the all mentioned opportunities that aluminium companies have in the future, NALCO share price target for 2030 is Rs 560.
|NALCO share price target 2030|
NALCO Share Price Target 2022, 2023, 2024, 2025, and 2030
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Frequently Asked Questions
Is NALCO a good stock to buy?
Yes, NALCO is a good stock to buy for the long term. NALCO has a healthy interest coverage ratio of 186. The company’s PEG ratio is 0.01. NALCO is very strong in terms of fundamentals and financials.
What is the target of National Aluminium?
The share price target of National aluminium for 2022 is Rs 150, NALCO share price target for 2023 is Rs 185, NALCO share price target for 2024 is Rs 220, NALCO share price target for 2025 is Rs 270, and NALCO share price target for 2030 is Rs 560.
Is NALCO a debt-free company?
NALCO is a virtually debt-free company. The debt of the company is just 46 crores which is a negligible amount and the debt-to-equity of the company is 0.