Metal prices are at a high level due to geopolitical tensions. Aluminum has reached a 13-year high. NALCO is expected to benefit from this going forward.
Rakesh Jhunjhunwala Portfolio Stocks: Due to the crisis in Russia and Ukraine, where the volatility in the equity market has increased. At the same time, due to this some companies have also reached the position of taking profit. In this, a company is the National Aluminum Company of the metal sector ie NALCO. Metal prices are at a high level due to geopolitical tensions. Aluminum has reached a 13-year high. Brokerage house Axis Securities says that the increase in aluminum prices will further benefit NALCO. The company is the only pure equity player in aluminum and aluminum commodities in India. The brokerage has advised investing in the stock with the expectation of an upside of 23 percent. It is also included in the portfolio of stock market veteran investor Rakesh Jhunjhunwala.
NALCO in a strong position to take advantage
Brokerage house Axis Securities says that NALCO is in a good position to take advantage of higher aluminum prices. It is the only pure equity player in aluminum and aluminum commodities. Due to the Russia and Ukraine crisis, aluminum prices have crossed a 13-year high of $3300/t. To take advantage of the high metal prices, the company has started optimizing its aluminum production by targeting 100% utilization of its 460ktpa smelter. The company has produced a record level of 115kt in Q3FY22.
EBIT/tonne of aluminum increased
Historically alumina contributed higher EBITDA at 70 per cent on average over the previous decade (FY12-21), while aluminum and wind energy/other segments contributed the remaining 20 per cent and 10 per cent EBITDA. However, the EBIT/tonne of aluminum has increased substantially (9MFY22 EBIT/tonne at $790/tonne vs $126/tonne in 9MFY21) from March 2021 onwards with the increase in aluminum prices. Each ton of aluminum sold is generating $560/tonne more EBIT/tonne than 2 tonne of alumina.
Multibagger Stock of Rakesh Jhunjhunwala Portfolio
NALCO stock is a multibagger stock in Rakesh Jhunjhunwala’s portfolio. The stock has given 114 percent return to the investors in the last 1 year. During this time the stock has gone from Rs 57 to Rs 120. So far this year, investors have got 20 percent return in the stock. Rakesh Jhunjhunwala has 25,000,000 shares of the company in his portfolio i.e. he holds 1.36 percent stake in it. The current value of these shares is 305 crores.
(Disclaimer: Stock investment advice is given by the brokerage house. These are not the personal views of The Financial Express. Markets are risky, so take expert opinion before investing.)
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