Nalco's 'Buy' recommendation and strong financials make it a top investment choice

National Aluminium Company (Nalco) has been making headlines recently with its upgraded stock call to 'Buy' by MarketsMOJO on May 17, 2024. This largecap company in the aluminium industry has shown promising results in the past few quarters, making it a favorable investment option.
One of the key reasons for the 'Buy' recommendation is the company's low Debt to Equity ratio, which is currently at 0 times. This indicates a strong financial position and stability for the company. In addition, Nalco has declared positive results in December 2023 after 5 consecutive negative quarters, with a significant growth in PAT (Quarterly) at Rs 470.61 crore, showing a 47.9% increase. The PBDIT (Quarterly) has also reached its highest at Rs 773.13 crore, with an operating profit to net sales ratio of 23.10%, which is the highest in the industry.

From a technical standpoint, the stock is currently in a bullish range and has shown a positive trend since May 15, 2024, generating a return of 2.77%. Multiple factors such as MACD, Bollinger Band, KST, and DOW are also indicating a bullish trend for the stock.

Moreover, Nalco has a high institutional holding of 27.8%, which shows that these investors have better capabilities and resources to analyze the company's fundamentals compared to retail investors. The stock has also outperformed BSE 500 in the last 3 years, 1 year, and 3 months, with a market-beating performance in the long term as well as the near term. With a market cap of Rs 34,850 crore, Nalco is the second-largest company in the sector, constituting 18.85% of the entire industry. Its annual sales of Rs 13,239.54 crore make up 5.72% of the industry.

However, there are some risks associated with investing in Nalco. The company has shown poor long-term growth, with an annual rate of -8.23% in operating profit over the last 5 years. Additionally, with a ROE of 9.5, the stock is currently trading at a very expensive valuation with a 2.7 price to book value. It is also trading at a premium compared to its average historical valuations. While the stock has generated a return of 139.45% in the past year, its profits have fallen by -24.3%.

In conclusion, Nalco's upgraded stock call to 'Buy' by MarketsMOJO and its positive financial results make it a promising investment option in the aluminium industry. However, investors should also consider the risks associated with the stock before making any investment decisions.