Shares of NALCO have been falling in the last couple of months. In just the last month, it has fallen 24.26%, while it has lost 30.74% in the last six months. Furthermore, in the last one year, the stock has corrected by almost 10.26%.
The stock made a 52-week high of ₹132.7 on April 6, 2022, but failed to hold on to this momentum and fell 48.15%. In the last week's trade, the stock hit a fresh 52-week low of ₹67.
National Aluminium Company Limited (NALCO) is a Navratna Central Public Sector Enterprise (CPSE) under the Ministry of Mines, Government of India. The Company is a group A' CPSE, having integrated and diversified operations in mining, metals, and power. Presently, the government of India holds a 51.50% stake in NALCO. The company is engaged in the business of manufacturing and selling alumina and aluminium.
The aluminium prices on the London Metal Exchange (LME) plunged 30% in the second quarter, the largest quarterly loss since the financial crisis in 2008, on the back of China's COVID lockdowns, inflation, rising interest rates and stalled growth, Reuters reported.
The speed and magnitude of the fall were unexpected and partly reflect the sale of metals such as aluminium and nickel, bought in anticipation of supply disruptions to material from Russia, which did not materialise after it invaded Ukraine.
The drop in aluminium prices will do more damage to NALCO as it is the only pure equity play on aluminium and alumina commodities in India.
Other industrial metals were also headed for their biggest quarterly fall in several years, down between 20–40%.
For instance, copper dropped 20% in the second quarter, the largest quarterly loss since 2011, when the bubble created by the massive Chinese stimulus burst. Zinc tumbled 24% and lead dropped 21% in the second quarter, the largest quarterly losses since 2010 and 2011 respectively. Tin and nickel crashed 38% and 29%, respectively, in the second quarter, the most on record.
This will certainly impact metals and mining companies. During the beginning of the Russian-Ukrainian crisis, the Nifty Metal Index rallied 22% in just one month.
JSW Steel, Tata Steel, Hindalco, and Vedanta posted huge profits, with their FY22 net profit seeing at least a 4X rise from FY20. Vedanta turned a huge ₹15,000 crore profit in FY21 after a ₹4,700 crore loss in FY20, and revenue increased nearly 58% year on year to ₹23,709 crore in FY22.
NALCO reported a 9.5 per cent rise in consolidated profit at ₹1,025.46 crore for the quarter ended March 2022 on the back of higher income as against ₹935.74 crore in the year-ago period.
However, the coal crisis hit metal companies hard in May. NALCO faces a coal shortage due to supplies being diverted to priority electricity generation and a shortage of trains to deliver to NALCO's power plants.
Adding to the challenges, the government imposed a 15% export duty on a range of finished steel products. In other steel categories, an export duty of 15% has also been levied on pig iron. On the raw material side, the government has increased the export duty by 58% and above Fe grade iron ore fines and lumps from 30% to 50%.
Since the announcement of the export duty hike, shares of NALCO have dropped by 30.61% from ₹98 to ₹68. Other shares of metals and mining companies also fell between 20–50% during the same period. Vedanta (down 31.47%), Hindalco (down 17.80%), and Tata Steel (down 19.65%), in the last one month
Meanwhile, Foreign Investors raise their stake in the company to 18.08% in March 2022 as against 8.41% in Q4 2021, up by 9.51%. The number of foreign investors increased from 267 to 332 in the March 2022 quarter. Promoters' holdings remain unchanged at 51.28%. While mutual funds decreased holdings from 10.12% to 8.70% in the March quarter.
