Summary
National Aluminium Company Limited - Q3 FY 2026 Earnings Call Summary Friday, January 30, 2026, 4:00 PM IST
Event Participants
Executives 6 Abhay Kumar Behuria (Director - Finance), Anil Kumar Singh (Director - Commercial), Bharat Kumar Sahu (Company Secretary), Brijendra Pratap Singh (Chairman-cum-Managing Director), Dr. Tapas Kumar Pattanayak (Director - HR), Pankaj Kumar Sharma (Director - Production)
Analysts 7 Aditya Welekar, Amit Lahoti, Manav, Pallav Agarwal, Pinakin, Pratik Kothari, Rajesh Bhandari, Rajesh Majumdar, Sumangal, Vikash Singh
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue from Operations | ₹5,000+ crores (est) | +13% YoY for 9M FY26; driven by significant volume growth in alumina and metal. |
| Profit After Tax (PAT) | ₹2,131 crores | +0.5% YoY for Q3; record 9M performance due to volume offsets against lower alumina prices. |
| EBITDA Margin | - | +20% YoY for 9M FY26; improved techno-economics and cost control mitigated price headwinds. |
| Alumina Production | 2.25 - 2.30 million tons | +20% YoY for 9M; Management targeting record annual output for FY26. |
| Aluminium Production | 472,000 tons (FY26 Target) | +3.5% YoY for 9M; operating above 100% rated capacity (460,000 tons). |
| Alumina Sales Volume | 1.1 million tons (9M) | +45% YoY for 9M; Q3 saw high shipments (4 per month), mostly spot-linked. |
| Cost of Production (Alu) | ₹1.52 - ₹1.60 lakh/ton | Stable range; alumina transferred at cost. Expected to rise slightly in Q4 due to carbon costs. |
| Net Debt/Cash | Strong Cash Position | Management noted no immediate need for hedging due to a robust balance sheet and cash flows. |
Geographic & Segment Commentary
- Alumina Segment: Realized record volume growth of 45% in 9M FY26. Profitability was impacted by a sharp drop in realized prices from $562/ton (CPLY) to $385/ton (9M average). Management expects Q4 realizations to soften further to $310-$320/ton due to global oversupply.
- Aluminium Segment: Revenue contribution increased by ₹410 crores in 9M FY26. Performance was bolstered by higher LME prices (averaging $2,867 vs $2,538 YoY). The segment operates at near-peak capacity, with plans to explore scrap melting to further increase output.
- International Markets: Middle East remains a key export destination, though January 2026 shipments were hampered by regional tensions. Management maintains a target of 1.25-1.30 million tons of alumina exports for the full year.
Company-Specific & Strategic Commentary
- Refinery Expansion: The 5th stream (1 million ton capacity) is scheduled for commissioning in June 2026. Management conservatively expects 300,000 tons of incremental production in the first year of operation.
- Smelter Expansion: A DPR is being finalized for a new 0.5 million ton smelter. The aggressive roadmap targets completion by December 2030 or early 2031, with major capex/ordering starting in FY27.
- Coal Backward Integration: Captive coal production is ramping up to 4 million tons. Current cost savings vs. linkage coal are ₹200-₹250 per ton, providing a structural hedge against energy inflation.
- Critical Minerals (KABIL): NALCO holds a 40% stake in the KABIL JV, currently exploring five lithium blocks in Argentina. Commercial viability results are expected in 1.5 to 2 years.
- Value-Added Technology: MoUs signed with BARC (Gallium extraction) and NML Jamshedpur (Rare earth extraction from red mud). These are currently at the pilot stage with a 1.5-year timeline for commercial results.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Alumina Production | 300,000 tons (Incremental) | Expected from new refinery stream in FY27 post-June 2026 commissioning. |
| LME Aluminium Price | $2,900 - $3,000 / ton | Management expects prices to remain firm due to supply constraints in China and Europe. |
| Capex | ₹1,700 Cr (FY26) / ₹2,000 Cr (FY27) | Sustenance capex plus final payments for the 5th refinery stream. |
| Caustic Soda Cost | ₹55,000 / ton | Expected sharp rise in Q4 FY26 from 9M average of ₹42,000. |
Risks & Constraints
| Risk | Context |
|---|---|
| Input Cost Inflation | Significant jumps in CP Coke (₹12,000/ton increase) and Caustic Soda prices expected in Q4 FY26 will pressure margins. |
| Geopolitical Unrest | Middle East tensions have already delayed alumina shipments in Jan 2026, posing a risk to export volume targets. |
| Global Alumina Surplus | New refining capacities in Indonesia and Thailand are keeping alumina prices depressed despite high metal prices. |
Q&A Highlights
Alumina Realizations & Contracts
- Question: What is the mix of spot vs. LME-linked alumina sales? (Amit Lahoti)
- Answer: In Q3, NALCO averaged 4 shipments per month (30,000 tons each), with 3 on spot and 1 linked to LME (approx. 11.5-12% of LME). This mix will persist in Q4. (Brijendra Singh)
Cost Drivers
- Question: Why did employee costs decline this quarter? (Pinakin)
- Answer: Driven by the superannuation of 300 employees and a ₹50 crore reversal of excess PRP provisions. Next wage revision is not due until January 2027. (Abhay Kumar Behuria)
New Refinery Timeline
- Question: Why is the incremental volume guidance from the new refinery 3 lakh tons vs. previous 5 lakh tons? (Vikash Singh)
- Answer: Commissioning starts in June 2026, but full stabilization to 100% capacity won’t occur until December. 300,000 tons is a more realistic target for the partial year. (Brijendra Singh)
Energy Strategy
- Question: Is captive coal still significantly cheaper than linkage coal? (Rajesh Bhandari)
- Answer: The gap has narrowed to ₹250/ton because the ₹400/ton GST compensation cess was withdrawn for linkage coal, but captive remains the most cost-effective source. (Brijendra Singh)
Key Takeaway
NALCO delivered a record physical performance in Q3 FY26, leveraging high capacity utilization (102% in aluminium) and a 20% surge in alumina production to offset a sharp decline in alumina market prices. While alumina realizations dropped to nearly $350/ton, the company benefited from firm LME aluminium prices ($2,800+ range) and improved techno-economic efficiencies in caustic soda and power consumption. Strategically, the company is nearing the commissioning of its 1 million ton refinery expansion in June 2026 and is aggressively pursuing a 0.5 million ton smelter expansion for 2030. However, management flagged a “huge jump” in carbon and caustic soda costs for Q4 FY26, alongside geopolitical risks in the Middle East that may disrupt export schedules. NALCO remains well-positioned with a strong cash balance and no debt, providing the foundation for its ₹2,000 crore annual capex cycle.
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