1:1 Bonus, 1:2 Split, 48 Dividends; Navratna PSU Stock Below Rs 230, Advised To BUY; JM Sets Rs 264 Target

Brokerage JM Financial has selected National Aluminium (NALCO) among its top Diwali picks for Samvat 2081 year. NALCO's growth prospectus are healthy due to the expansion of its alumina refinery, rising alumina prices, and cost-saving through captive coal mining. Currently, NALCO share price traded below Rs 250 levels, and has surged by nearly 67% YoY.

NALCO Share Price:

After market hours of October 31, 2024, NALCO shares closed at Rs 227.10 apiece, broadly flat on BSE with a market cap of Rs 41,709.91 crore. The stock is near its 52-week high of Rs 235.40 apiece, while has skyrocketed by more than 154% from its 52-week low of Rs 89.38 apiece.

The price-to-equity ratio was at 18.04x, while the return on equity was around 15.86%.

JM Financial on NALCO shares:

The brokerage highlighted that NALCO is a PSU with the government of India stake at 51.3% as of June 2024. The company is one of the largest producers of bauxite, alumina and aluminium in India with the production of 0.46mt/2.12 mt for aluminium/alumina in FY24.

It added that the export sales volume of alumina stood at 1.17mt in FY24. NALCO's expansion of its alumina refinery, rising alumina prices, and cost-saving through captive coal mining are expected to drive earnings growth.

On the valuation, JM's note said, "The current price is ₹227, and our target is ₹264, giving an upside of 17% over the next 6-12 months."

NALCO has a strong record of dividends, splits and bonuses.

Dividends: NALCO has delivered up to 48 dividends since August 2000, as per Trendlyne data. In the last 12 months, the stock has rewarded investors with a Rs 5 dividend per share. Currently, it has a dividend yield of 2.2%.

Stock Split: NALCO has split only once and that was in March 2011. The stock split ratio was 1:2, where the face value of Rs 10 was trimmed to Rs 5 each.

Bonus Issue: Also, in March 2011, the company delivered a bonus reward of a 1:1 ratio. Simply put, NALCO gave 1 free share on the existing 1 equity share.

National Aluminium Company Limited (NALCO), a 'Navratna' company under the Schedule 'A' category of CPSEs, was founded on 7th January 1981 with its registered office in Bhubaneswar. It is one of the country's largest bauxite, alumina, aluminium and power complex. Currently, the Indian government owns 51.28% of NALCO's 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 the Aluminium Smelter & Captive Power Plant at Angul.