NALCO Exceeds Fourth-Quarter Profit Estimates Due to Lower Raw Material Costs
India's National Aluminium Company (NALCO) reported a fourth-quarter profit that surpassed analysts' estimates, driven by reduced costs of key raw materials, including thermal coal and bauxite. The state-owned firm announced a consolidated profit before exceptional items and tax of 9.43 billion rupees (approximately $114 million) for the three months ending March 31. This figure is significantly higher than the analysts' average estimate of 6.38 billion rupees, according to LSEG data.
However, NALCO faced an exceptional cost of 4.27 billion rupees in the quarter, related to a legal mining lease royalty payment to the government. Despite this, the company managed to keep its expenses under control by sourcing more domestic thermal coal and bauxite, which contributed to lower raw material costs. Overall expenses decreased to 27.20 billion rupees from 31.61 billion rupees a year ago, reflecting a 22% decline in raw material costs.
Revenue from operations fell by 2.5% to 35.79 billion rupees, influenced by a decrease in aluminium prices. The benchmark three-month aluminium on the London Metal Exchange averaged $2,241 per metric ton in January-March 2024, an 8.2% decline compared to the same period in 2023.
Despite the lower aluminium prices, the reduction in raw material costs helped offset the impact, leading to a stronger-than-expected profit performance. NALCO's shares rose by 16% in the quarter, outperforming the Nifty metal index, which increased by 3.5%.
This positive performance follows a similar trend seen with rival Hindalco, which also reported fourth-quarter profit above estimates due to lower costs.
