National Aluminium Company Ltd Q3 FY2026 Concall Summary

Key Takeaways

• Record volumes, offset by alumina price collapse: Best-ever physical and 9M financial performance, with revenue up ₹2,000 crores driven by volume, but alumina price decline from \$562 to \$385 wiped out ₹1,652 crores.
• Cost discipline held the line: Expenditure rose only ₹500 crores on ₹2,000 crores of revenue growth, with power & fuel savings of ₹142 crores and employee costs down ₹118 crores, protecting profitability despite the alumina price rout.
• New refinery is the near-term catalyst: Commissioning starts June, with 60% of rated capacity expected by September–October and full capacity by December, adding ~3 lakh tons of alumina production next year.
• Carbon and caustic soda costs are rising into Q4: CP coke contract price jumping ~₹12,000 per ton and caustic soda landed cost rising to ₹55,000 from ₹42,000, though management expects techno-economic efficiencies to partly offset the impact.
• What to watch next quarter: Whether Q4 alumina realizations hold at the guided \$310–\$320, the pace of new refinery commissioning, and how much of the carbon cost increase flows through to the aluminium cost base.

Volume-Led Performance in a Falling Alumina Market

• Record production across the board: Alumina production ramped from 2,050,000 tons to ~2,250,000 tons, while aluminium is running above rated capacity at 472,000 tons against a 460,000-ton nameplate.
• Revenue bridge reveals alumina's drag: Alumina contributed ₹1,600 crores and metal ₹410 crores to the ₹2,000 crore 9M revenue increase, but alumina price decline from \$562 to \$385 had a negative ₹1,652 crore impact, partially offset by metal price rising from \$2,538 to \$2,867 adding ₹781 crores.
• Q3 PAT flat despite headwinds: Income rose ₹200 crores while expenditure rose only ₹60–70 crores, keeping PAT nearly unchanged at ₹2,131 crores (vs ₹2,121 crores YoY).
• January alumina sales disrupted: Middle East tension hit exports to that region, with only two shipments in January; management aims to make up the shortfall in February and March to reach the full-year target of 1,250,000–1,300,000 KT.
• Alumina-to-aluminium ratio unchanged at 1.93: Apparent volume discrepancies stem from storage-level changes across Vizag, Damanjodi, and smelters, not from any shift in conversion efficiency.

Brijendra Singh: "So there has been a strong both physical and financial performance and main reason of this physical and financial performance has been the increase in the volume of production. We have increased the volumes of production."

Cost Structure: Discipline Now, Pressure Building

• Power & fuel savings anchored performance: ₹142 crores saved in 9M, with Q3 alone seeing a ~₹70 crore sequential drop because Q2 had carried the impact of withdrawn GST compensation sales benefit on linkage coal.
• Employee costs fell on superannuation and a one-time provision reversal: ~300 senior employees superannuated without commensurate recruitment, reducing real manpower cost, plus ~₹50 crores was withdrawn from excess PRP accounting provision after actual calculation.
• Captive coal advantage is real but narrow: Captive coal is cheaper than outside coal by only ~₹200 per ton landed at the power plant; savings up to Q3 were ~₹30 crores, with Q4 also expected to benefit as linkage coal prices have come down.
• Carbon costs are the Q4 headliner: CP coke new 6-month contract (Jan–June) expected at ~₹54,600, up from ₹42,764; CT pitch rising from ₹51,000 to ₹53,000; caustic soda landed cost rising to ₹55,000 from ~₹42,000 average.
• Integrated aluminium COP stays in a tight band: ₹152,000–₹160,000 per ton, with captive alumina transferred at cost; Q4 cost will increase slightly but techno-economic improvements are expected to offset much of the raw material inflation.
• Grid dependence is negligible: 96–97% of power comes from captive sources; only 9 crore units imported over 9 months against 577.3 crore units generated internally.

Abhay Kumar Behuria: "Second, we have made some accounting provision towards our PRP, which is not required now because we have calculated actual calculation and whatever excess provision we have made, we have withdrawn this quarter, this quarter 3. That is also around Rs.50 crores that is impact."

New Refinery: The Growth Catalyst Taking Shape

• Commissioning timeline is set: Process starts in June, takes 2–3 months to stabilize; 60% of rated capacity expected by September–October, full 10 lakh ton capacity by December.
• Production expectations have been reset lower: Management now expects ~3 lakh tons from the new refinery next year, down from an earlier ~5 lakh ton expectation, though the commissioning timeline was described without confirming or denying a delay.
• Long-term contracts are being pursued: Middle East parties have approached NALCO for 1–3 year contracts; the company will float tenders and decide based on the offers received.
• Refinery capex is largely spent: Total spend to date is ₹5,000 crores; next year (FY27) expected at ₹500–₹600 crores, with the heavy lifting done.

Brijendra Singh: "We'll be going in some interested parties are also there. Middle East, some parties have approached us for long-term contract that is one year, two year, three years. We will be floating some tenders. If we get better offers, we'll be going for it. It only depends on what offer we are getting."

Alumina Market: Oversupply and Price Pressure

• Structural oversupply is the core problem: New refineries in Indonesia and smelter closures (Mosul, Iceland) have created excess alumina; China capping smelting capacity at 4.5 crore tons adds to the imbalance.
• Q4 realization guided at \$310–\$320: A similar trend to Q3, with one LME-linked shipment and the rest on spot; the alumina price decline from \$580 to \$380 has been the single largest drag on profitability.
• Domestic vs export realization gap is minimal: Only ~₹1,500–₹2,000 per tonne difference due to export incentives.
• Market stabilization may come from new smelting capacity: Thailand and Indonesia are expected to add smelting capacity next year, which could absorb excess alumina and support prices.
• Alumina pricing mechanism includes LME-linked shipments: Some shipments are linked to LME at ~12% or ~11.5% depending on the tender; as LME rises, the percentage goes down.

Brijendra Singh: "You see there is an excess of alumina in the market. In Indonesia, 2 refineries have come up and a few of them are closed down, like Mosul, one has closed down. Iceland, one has closed down smelting capacity has gone down and refining capacity has come up more so. There is an excess of alumina in the market."

Aluminium: Steady Volume, Favorable Price Outlook

• Production running above rated capacity: Rated at 460,000 tons, currently targeting 472,000 tons; exploring scrap sourcing to utilize additional casting capacity of 50,000–100,000 tons, potentially adding 10,000–20,000 tons of cast metal.
• LME outlook is constructive: Current LME ~\$3,200; expected to remain around \$3,000 this quarter; next year between \$2,800–\$3,000, averaging ~\$2,900, comfortably above \$2,600.
• Domestic premiums are compressing: Ingot-to-wire-rod premium has narrowed from ₹10,000 to ₹6,000–₹7,000, though higher absolute LME levels this year (\$2,800+ vs \$2,500) support better overall premiums.
• Pricing is LME-based with frequent review: MJP premium is sometimes considered; pricing is reviewed every 3 days if LME crosses certain limits.

Strategic Optionality: Critical Minerals, Expansion, Hedging

• Three critical minerals projects are in pilot phase: MoU with NML Jamshedpur for rare earth extraction from red mud (1.5–2 years to set up technology); MoU with a Chennai-based party for reactor-based extraction from mines (samples taken, experiments ongoing); MoU with BARC for gallium extraction from Bayer's liquid.
• KABIL lithium exploration is a long-dated call: The JV with HCL and MECL holds 5 mines in Argentina; invested exploration is ongoing, with results expected in ~1.5 years to determine lithium quantity and commercial mining feasibility.
• Smelter expansion DPR is underway: Consultant being appointed; road map to be finalized by June–August; 36-month construction timeline; target to add 0.05 crore ton smelting capacity by end of December 2030 or early H1 2031.
• Hedging is off the table for now: Management sees no need given a strong balance sheet and no cash flow commitments, but may consider it in FY27–28 when the capex plan is in full swing and EBITDA/margin protection becomes necessary.
• Caustic soda JV provides raw material security, not profits yet: Assured quantity of 1,50,000 tons at tender-discovered price helps curtail price increases from other suppliers; pricing policy is under review.

Abhay Kumar Behuria: "We have not adopted hedging mechanism now because we don't think our model of business, if you see alumina and metal both. So this hedging, we don't feel this is required now, but we don't have any commitment. Our balance sheet is so strong. We don't have any cash flow commitment. So if the situation comes up to '27, '28, when our capex plan will be in full swing and we have committed cash flow and we need to protect our EBITDA and margin, then we will think of this hedging."

Brijendra Singh: "Already, we are in the process of it. We are already in the process of appointing one consultant for making DPR and our road map is maybe this year by maybe this year, June, July, August, we'll be finalizing the DPR. After that, 36 months, we have made our road map. And maybe by end of December '30 or maybe early first half of 2031, we have to make and add another 0.05 crore tonne smelting capacity."

Guidance & Commitments

Key Metrics