NATIONALUM Q4 FY25 earnings call.
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Revenue
₹5,268 Cr
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EBITDA
Pending
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What the record says.
NALCO reported historic FY25 performance driven by elevated alumina prices (~$600/t Q4 realization) and operational efficiencies. Management acknowledged that the 46% EBITDA growth and record margins were largely price-driven and unsustainable—Q1 FY26 alumina spot prices have corrected to ~$400/t. The 1 million tpa alumina refinery expansion (5th stream) faces ~6-month delay, now expected to commission May-June 2026 instead of September 2025, due to local tribal area issues and labor constraints. The 75% project completion leaves INR ~875 crore CapEx commitment. Key cost initiatives include caustic soda consumption reduction (120 kg→111 kg/t alumina) and captive coal replacing 4 million tonnes of linkage coal (INR 300-400/t savings). Smelter expansion (0.5 mtpa) faces technology uncertainty as Rusal/Artel is unwilling to provide RTA technology; fresh DPR due in 6-8 months. Management guided FY26 EBITDA margin of 36-37% on lower commodity prices offset by volume growth and cost savings. INR 1,700 crore CapEx planned for FY26 with 4 million tonnes coal production target.
Colored figures show movement against the previous available record.
Guidance to track
- Management targets 36-37% EBITDA margin for FY26, down from ~46% in FY25, reflecting lower alumina prices (~$400/t vs $600/t) offset by volume growth and INR 1,000-2,000/t cost reduction in alumina production.
- Current alumina spot prices at ~$400/t with recent tenders at $350; management expects stabilization around $400 level through Q1.
- CapEx guidance for FY26 is INR 1,700 crore (~60% toward refinery expansion and Pottangi mine), with INR 2,000 crore planned for FY27.
- Mechanical completion expected Jan-Feb 2026, followed by 2-4 months commissioning; commercial production targeted May-June 2026. 75% financial commitment completed with ~INR 875 crore remaining.
Risks flagged
- Spot alumina prices have corrected sharply from ~$600/t in Q4 FY25 to ~$400 currently, driven by new Indonesian/Indian refinery capacity and Chinese smelter curtailments. Management flagged risk of further downside to $350-400 range.
- Rusal/Artel unwilling to provide RTA technology for 0.5 mtpa brownfield smelter. Management restarting DPR with EIL; timeline to final investment decision extended by 6-8 months minimum. Total INR 30,000 crore CapEx (smelter + CPP) at risk of further delay.
- Guinea supplies 60-70% of global bauxite. Recent revocation of EGA's mining license and potential policy changes pose supply disruption risk to global alumina industry, though NALCO has Pottangi mine security.
- The INR 4,500-5,000 crore special grade aluminum JV with MIDHANI is on hold due to lack of commercial viability. Demand projections from transportation/railways not materializing as DPR assumed. Ministry-level discussions ongoing.
Key quotes
- This year also, whatever plan we have made, physical performances and financial, we will be targeting around maybe 36%-37% EBITDA margin. And profitability, of course, may vary depending on the prices of alumina and prices of aluminum.
- We have completed 75% of our financial commitment. It is along with the project progress. So only 25% of commitment is left. And it is not going to increase our cost of the project. We are completing the project in the approved budget itself. So time has increased, but budget is not increased.
- The proposal which our board had approved for INR 17,000 crore of investment in smelter and power plant would cost another INR 10,000 crore. That time, this IRR was taken. Now we are coming up with the fresh detailed project report for smelter as well as power plant. And after that, we'll be coming out with what will be the IRR.
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