National Aluminium Company Ltd (Nalco) shares rallied over 6 percent Friday led by a slew of factors. Hopes of volume recovery, rise in alumina prices and an upcoming dividend payout is lifting the stock prices.
The company's board will meet on September 6, 2021, to consider a final dividend payout for FY21.
Further, alumina prices have been a laggard in comparison to the sharp move in aluminium prices. However, alumina prices seem to catch up owing to shutdowns in China Guangxi province and on strong demand.
Last week, Kotak Institutional Equities had increased estimates for alumina and aluminium by 4 percent to 10 percent for the next two fiscals.
Also, the street is bracing for a splendid Q2FY22. The April-June quarter was hit by lower sales volumes though production numbers indicated that some inventory build-up could have been one of the reasons why the volume numbers didn’t look too good.
Now that inventory can get liquidated in the coming quarters, the street hopes the volume pick up coupled with the price increase will aid the company's profitability.
Meanwhile, in Q1FY22, the employee cost spiked up by 13 percent year-on-year (YoY) and 35 percent sequentially, which hurt its Q1FY22 performance.
Put these factors together, it explains why the stock is flying away and regained the losses that were seen post its Q1FY22 number when stock saw a sharp correction.
Watch the accompanying video of CNBC-TV18’s Nigel D’Souza for more details.