Nalco Q2 net profit jumps manifold to Rs 179 crore

KOLKATA: National Aluminium Company ( Nalco) posted a jump in net profit to Rs 179.17 crore during Q2 FY14 up from Rs 4.78 crore in same period last year led by strong operarional perfomance led by lower input costs due to better coal linkages. The company's net sales rose 7.8% to Rs 1,710 crore in July-Sept 2013 from Rs 1,586 crore in a year ago period, driven by its chemicals business.

The company benefited from an absolute fall in input costs with power and fuel charges going down to Rs 519.15 crore from Rs 753.46 crore during the second quarter of FY14. Thus as a percentage of net sales, power and fuel costs went down to 30% from 47% during the quarter under review.

Revenues from Nalco's chemicals business jumped 49% year on year (y-o-y) to Rs 965.5 crore during July-September 2013 while aluminium business revenues saw a 22% slide to Rs 975.14 crore. In the qurter under review, share of chemicals business in total sales increased to 41.6% from 27.5% earlier, while contribution of aluminum in total sales declined to 42.1% from 52.9%.

Nalco's Q2 results beat analysts' expectations. As Bhavesh Chauhan senior research analyst (metals & mining) at Angel Broking said: "Nalco's operating results in Q2 FY14 were above our estimates due to better-than-expected profitability from its alumina (chemicals) division. Its net sales increased 7.8% y-o-y to Rs 1,710 crore, above our estimate of Rs 1,567 crore.

Nalco's power costs declined by 31.9% y-o-y to Rs 513 crore due to lower aluminium sales (which requires high power consumption). Sales of alumina division sales rose 48.9% o Rs 966 crore. The markets too reacted positively to Nalco's Q2 results with the scrip rising 3.68% to close at Rs 39.40 on the BSE.