Rakesh Jhunjhunwala stock: Axis Securities bullish on this multibagger; here's why

Shares of National Aluminum Co. Ltd (NALCO), a part of Big Bull Rakesh Jhunjhunwala's portfolio, have delivered a multibagger return to its shareholders in the last 12 months.

In the past one year, the share price of NALCO jumped from Rs 57.8 to Rs 126.60 mark ---- logging around 119 per cent return in this period. However, brokerage firm Axis Securities believes that the company is well placed to benefit from the strong Aluminium prices and still has an upside potential of around 20 per cent.

The stock closed 0.28 per cent lower at Rs 125.60 against the previous close of Rs 125.95. With a market capitalisation of Rs 23,068 crore, the shares stand higher than 5 day, 20 day, 50 day, 100 day and 200 day moving averages.

According to Axis Securities, NALCO is the only pure equity play on Aluminium and Alumina commodities in India and Aluminium is expected to remain in a deficit for a second consecutive time in CY22 supporting higher prices.

It noted that the recent geopolitical tension in Europe has pushed prices to a 13-year high level above $3,300/t and NALCO is well placed to benefit from the higher prices.

"We have a BUY rating and value the company at 5.5x FY24 EBITDA and 0.5x book value of CWIP to arrive at the target price of Rs 150 per share, implying an upside potential of about 20 per cent from the current levels," Axis Securities said in its recent report.

However, the brokerage firm also highlighted that NALCO is sensitive to Aluminium, Alumina and input raw material such as coal and caustic soda prices. Unfavourable price movement will adversely impact our target price and rating.

For the December quarter, NALCO's consolidated profit surged over three times to Rs 830.67 crore. The company had posted a profit of Rs 239.71 crore for the year-ago period.
 
Income during the quarter increased to Rs 3,845.25 crore over Rs 2,414.95 crore in the year-ago period, NALCO said in a filing to BSE.
 
According to the shareholding pattern for December 2021, Rakesh Jhunjhunwala held a 1.36 per cent stake or 2,50,00,000 shares in the company.
Tanya Aneja
Tue 4/5/2022 5:10 PM