The actions of the Dalal Street market specialists are widely followed by investors. Shares of National Aluminum Co. Ltd. (NALCO), which is part of Big Bull’s portfolio, have provided multi-bagger returns to its shareholders over the past 12 months.
NALCO reported exceptional profit for the quarter ended September 2021. The company reported net profit of more than seven times greater than Rs 748 crore for the quarter ended September 2021. Profit for the period of last year s amounted to Rs 107 crore. Total income rose to Rs 3,592 crore from Rs 2,375 crore during the period last year.
Over the past year, Nalco’s share price has gone from Rs 36.7 to Rs 101.60, with a return of around 177% during that time. With a market cap of over Rs 18,000 crore, the stocks are above the 50-day, 100-day and 200-day moving averages, but below the 5-day and 20-day moving averages.
So what should investors do?
“Technically, Nalco has formed a ‘shooting star’ candlestick pattern which is a bearish reversal pattern. Now the levels of Rs 127 have become crucial resistance and until these levels are not removed the trend is to The short to medium term remains negative. The stock has seen a boom for 6 consecutive quarters and it will be interesting to see if it manages to close in positive territory for another quarter, “said Jay Thakkar, vice president and Head of Equity Research at Marwadi Shares and Finance Limited. BusinessToday.In.
He said if it closes below Rs 93 levels on a quarterly basis it would further confirm a reversal. The MACD momentum indicator on the weekly charts has entered sell mode with negative divergence which is quite negative in the short term.
“Basically, the stock posted one of the best quarterly results of recent times, but the price appears to have fallen similarly well in advance, so the reaction hasn’t been entirely positive. ‘The stock is expected to correct to 89-77 levels. which will represent 38.2-50% retracement levels of the entire rise from the March 2020 lows, ”he noted. .
He further added that immediate resistance to the upside is set at Rs 111 and Rs 115, which represents a 50 and 61.8% retracement of the recent drop from Rs 127 levels. For now, the risk / reward ratio is not favorable for new shorts, therefore any bounces up to the above mentioned levels should be used as a sell opportunity.
According to Systematix Institutional Equities, high alumina prices and a continued rise in aluminum prices (to record highs of $ 2,676 / t) would lead to short-term profits even as the prices of several inputs, in especially for caustic soda and auctioned coal, have increased.
“NALCO is trading at 3.7 / 3.6x EBITDA for FY 22 / 23E, which is a significant discount to its mid-cycle EBITDA of 5 to 6 times. repayment of less than 2-3 years supported by cyclical factors, ”he said in a report.
“NALCO’s high cash balance allowed it to invest during down cycles. We are revising our EBITDA estimates for FY22 / 23E by + 13% / + 11% to Rs 4,100 crore / Rs 4,000 crore and maintain our “BUY” rating on the stock with a revised target price of Rs 131 ( Rs 117 previously) based on a multiple of 5x FY23E EV / EBITDA, which implies a 28% hike, “he added.
Big bull stake
This is a new investment from Dalal Street veteran Rakesh Jhunjhunwala, whose name was not on the large shareholder list in previous shareholder data.
According to the shareholding model of September 2021, Rakesh Jhunjhunwala held a stake of 1.36% or 2,500,000 shares of the company.