Nalco's Stock Downgraded to 'Hold' by MarketsMOJO, Despite Positive Q4 Results

National Aluminium Company (Nalco) has recently been downgraded to a 'Hold' by MarketsMOJO, a leading stock analysis platform. This decision was based on various factors, including the company's low Debt to Equity ratio, which is currently at 0 times on average.
However, Nalco has shown positive results in the quarter ending March 2024, with its PBDIT (Profit Before Depreciation, Interest, and Taxes) reaching a record high of Rs 1,107.51 crore. The company also recorded its highest Operating Profit to Net Sales ratio at 30.94% and PBT (Profit Before Tax) less OI (Other Income) at Rs 839.54 crore.

Technically, the stock is currently in a Mildly Bullish range, with indicators like MACD, Bollinger Band, and KST (Know Sure Thing) showing bullish signals. Additionally, Nalco has a high institutional holding of 27.8%, indicating that these investors have better resources and capabilities to analyze the company's fundamentals.

In terms of performance, Nalco has been beating the market in the long term as well as the near term. In the last 1 year, the stock has generated a return of 132.56%, outperforming the BSE 500 index. It has also outperformed the market in the last 3 years, 1 year, and 3 months.

With a market capitalization of Rs 35,392 crore, Nalco is the second-largest company in the aluminium sector, behind Hindalco Industries. It also constitutes 18.17% of the entire sector and has an annual sales of Rs 13,148.41 crore, which is 5.68% of the industry.

However, Nalco's long-term growth has been poor, with its Operating Profit growing at an annual rate of -8.23% over the last 5 years. Additionally, with a ROE (Return on Equity) of 11.6, the stock is currently trading at a very expensive valuation with a Price to Book Value of 2.5. It is also trading at a premium compared to its average historical valuations.

Although the stock has generated a high return of 132.56% in the last year, its profits have only increased by 16.6%. This results in a PEG (Price/Earnings to Growth) ratio of 1.3, indicating that the stock may be overvalued. Based on these factors, MarketsMOJO has downgraded Nalco's stock to a 'Hold' recommendation.