NALCO - Good quarter aided by lower coal costs - Kotak

Nalco reported 4QFY13 EBITDA of Rs4.2 bn, 26% ahead of our estimate. Strong performance was aided by (1) 17% sequential decline in fuel costs due to higher linkage coal and (2) solid volume-led performance in alumina division. Lower coal costs provided some respite to the high-cost aluminum business as it reported a positive EBIT after six straight quarters of losses. Delay in mining commencement at Utkal E block due to land acquisition issues will keep costs elevated and largely dependent on erratic linkage coal supply. We are also concerned on value-destructive usage of cash on large pipeline of projects.

We maintain REDUCE.

Source : Equity Bulls

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