National Aluminium Company Ltd Q3 FY2025 Concall Summary

Key Takeaways

• Record quarter, record nine months: Highest-ever quarterly and nine-month turnover, PAT, and EBITDA since inception, driven by better alumina and metal realizations, higher alumina volumes, captive coal use, and lower raw material costs.
• Alumina price super-cycle peaked and rolled over: Spot alumina spiked to ~\$800 in June on Australian supply disruptions, but that plant has restarted and spot has corrected to ~\$530, with management expecting a further settling toward \$450–\$500.
• Expansion engine is now fully funded and moving: The board has cleared the 0.05 crore ton smelter and ~1,200 MW captive power plant, with a technology partner selected and a 70:30 debt-equity financing plan against a net worth expected to exceed ₹17,000 crore.
• Coal security transforms the cost base: Utkal D & E coal blocks will produce ~0.4 crore tons next year, eliminating the need for e-auction coal entirely, though a 50-50 blend with linkage coal remains a technical requirement.
• What to watch next quarter: Whether Q4 alumina realizations land near the ~\$600 indicated by already-booked spot sales, the pace of the Pottangi MDO appointment and mine start, and any tariff-driven disruption to aluminum flows.

Alumina: The Price Cycle and Realization Mechanics

• The spike and the correction: Global alumina prices surged to ~\$800 spot in June when Australian production stopped and bauxite supply from New Guinea tightened, creating a 4–5 lakh ton demand-supply gap. That Australian plant has restarted, closing the gap, and spot prices have corrected to ~\$530.
• Spot-heavy sales book captured the upswing: Because prices were rising, most alumina sales were executed on a spot basis, locking in higher realizations. Q4 realizations are expected around ~\$600 because spot bookings were made 2–3 months earlier at elevated prices, even though current spot is lower.
• Outlook is for further softening: Management expects spot alumina to settle around \$450–\$500 as demand and supply rebalance, with a very marginal global deficit forecast.
• US tariff risk cuts both ways: 25% US tariffs on aluminum could divert metal from the US to other markets, pressuring aluminum prices, or cause smelter closures that reduce alumina demand. Alumina cannot be stored long, so production must be consumed.

Bijendra Pratap: "We are confident enough by December, we will be finishing and starting the trials of the commissioning."

The Expansion Roadmap: Refinery, Smelter, and Power

• Fifth-stream refinery imminent: The 0.1 crore ton per annum alumina refinery expansion is expected to finish and begin trial commissioning between September and December, with commercial volumes from April onwards (FY27). First-year production is targeted at ~5 lakh tons, ramping to rated capacity.
• Pottangi bauxite mines on a parallel track: All clearances are obtained, board clearance for the MDO appointment is given, and the NIT will be floated by February end or March. Orders are expected by May–June, with the MDO needing six months to start mines, targeting a September–December start window.
• New refinery cost profile neutral to existing: Bauxite cost from Pottangi is estimated similar to current (~₹1,000 per ton). Caustic soda consumption will drop 6–7 kg per ton, saving ₹500–₹700 per ton, but added depreciation will keep total cost in the same range as the existing ~\$240–\$250 per ton.
• Smelter expansion locked in for FY29–30: The 0.05 crore ton smelter DPR has been prepared by EIL and approved by the board. Rio Tinto (Canada) has been selected as the technology partner, with negotiations on the verge of finalization. Tender documents will be prepared within six months, the tender floated in seven–eight months, and commissioning is expected in four–five years.
• Captive power plant JV with NTPC in early stages: An MOU with NTPC exists, and negotiations for a joint venture for the ~1,200 MW captive power plant are in the initial phase. New regulatory norms require 30% green power, which may reduce the coal-based component to ~700–800 MW if NTPC can source the green portion.
• Hot metal capacity gap under study: Current hot metal capacity is 0.45 crore tons against casting capacity of ~0.06 crore tons, leaving a gap of ~1.5 lakh tons. EIL has been engaged to study adding pots and/or using scrap to increase cast metal production with small investment.

Bijendra Pratap: "we have requested EIL to make a study. It cannot come, as it is. We'll have to do some investment, maybe adding some pots and increasing maybe some captive power also. With small investment, we can have this increase in the capacity of the total overall cast metal."

Coal: The Quiet Margin Story

• Captive coal eliminates e-auction dependence: Utkal D & E coal blocks will produce ~0.4 crore tons next financial year, fully replacing e-auction coal purchases. A 20% automatic increase to ~0.48 crore tons is possible in the subsequent year.
• The 50-50 blend constraint: Technology requires a strict 50-50 mix of captive and linkage coal because using more captive coal creates process problems due to coal quality. This caps the direct cost benefit but still removes the premium paid on e-auction volumes.
• Company pursuing further coal mines for the expansion program, though no specific blocks have been named.

Bijendra Pratap: "So whatever coal we were taking through e-auction, that will not be required to take the auction coal, and all will be produced through this full Utkal D & E."

Financing the Growth: Debt, CAPEX, and Returns

• Debt-funded expansion with a 70:30 target: The company will take on debt for the smelter and CPP CAPEX, targeting a debt-equity ratio of 70:30. Net worth is expected to exceed ₹17,000–₹17,500 crore by FY end, which management says is sufficient to finance the entire CAPEX through external financing.
• CAPEX phasing is back-end loaded: FY27 will see ~10–15% of total smelter CAPEX, with the subsequent two–three years absorbing 25–30% per year. Next year's total CAPEX plan is ~₹2,000 crores, with maintenance CAPEX of ₹700–₹800 crores continuing.
• Financial returns not yet disclosed: Management declined to provide incremental EBITDA per ton or IRR projections for the ~₹30,000 crore smelter-plus-CPP investment, stating the 2019 DPR needs to be revisited with updated technology and coal mine inputs.
• Value-added products as the LME hedge: The 5 lakh ton smelter expansion creates space to enter extrusion and other downstream products, which management says are "much more immune to LME fluctuation" with margins well protected from metal price cycles. The ₹13,000 crore CPP CAPEX excludes value-added product CAPEX.

Srimanta Panda: "if we are ending the FY with more than 17,000 or 17,500 net worth, the company will be in a very good position to finance the entire CAPEX up for, metal and, power plant expansion through external financing."

Market Context and Demand

• India aluminum consumption set to surge: Consumption is estimated to grow from ~0.49 crore tons in FY24 to ~0.83 crore tons per annum by 2030, driven by infrastructure, electrical, and transportation sectors.
• Metal exports went to zero by choice: Metal export was zero in Q3 versus Q3 FY24 because domestic market realizations were significantly higher, driven by infrastructure and transportation demand.
• Global market expects small surplus: A small surplus of primary aluminum is expected by end of 2025, with US tariff announcements creating volatility in the near term. The alumina market is expected to see a very marginal deficit.
• External alumina sales volume: ~0.11 crore tons of alumina will be available for export or domestic sales annually, with excess alumina from the refinery expansion destined for the new brownfield smelter.

Manie Ravi: "The consumption in India on 2023 - 2024 is about 0.49 crore tons and going by the estimates and the market analysis by 2030 in India is estimated that this particular consumption would increase to about 0.83 crore tons per annum."

Costs, One-Offs, and the Lithium Option

• Employee cost decline is a one-time reversal: Nine-month employee cost fell ~₹150 crores due to a one-time provision reversal for non-executive PRP. Underlying employee cost remains stable and is expected to stay at ₹2,100–₹2,200 crores even after expansion.
• Impairment charge hit depreciation: Q3 depreciation rose to ₹2.86 crore mainly due to a ₹106 crore impairment provision for a wind power plant in Rajasthan where no PPA exists. Power is being injected into the grid and money may be received later, but accounting standards required the charge.
• Pay commission looms but is unprovided: The pay commission for CPSEs is expected in January 2027, and no provisioning has been made yet.
• KABIL lithium exploration progressing: The JV with HCL and MECL has been allotted 4 mines by CAMYEN in Argentina. Non-invasive exploration results are expected by 25th March, with invasive exploration to follow, exploration completion by May–June 2026, and a mining investment decision by mid-2027. Management called any CAPEX or financial projections "very premature."
• Volume growth target of 5–10% next year: Management aims to increase volumes through refinery modifications, not smelter changes.

Guidance & Commitments

Key Metrics