NALCO Shines Bright: A Deep Dive into Q2 & H1 FY26 Performance

National Aluminium Company Limited (NALCO) has delivered a stellar performance for the second quarter and first half of the financial year 2025-26, showcasing robust operational efficiency and strong financial growth. The company reported its best-ever Q2 and H1 results, driven by significant increases in production volumes and enhanced operational efficiencies. For Q2 FY26, NALCO's Net Sales stood at INR 4,262 crore, contributing to a Total Income of INR 4,444 crore. The Profit Before Tax (PBT) for the quarter was INR 1,895 crore, and Profit After Tax (PAT) reached INR 1,433 crore, marking a remarkable 34.9% increase in PAT compared to Q2 FY25. The first half of FY26 also saw impressive figures, with Net Sales at INR 8,048 crore and a Total Income of INR 8,374 crore. H1 PBT surged to INR 3,325 crore, and PAT grew by 50.15% to INR 2,497 crore, underscoring a period of sustained growth and profitability.

The strong financial performance was underpinned by solid operational metrics. Bauxite excavation increased by approximately 13% in Q2 and 6.25% in H1 compared to the previous year. Alumina production saw a 15% rise in Q2 and a significant 31.33% increase in H1. Cast metal production also grew by about 3.48% in Q2 and 3% in H1. The company's revenue from operations for Q2 increased by 7.27%, while expenses were reduced by 3.34%. For H1, revenue from operations grew by 18%. These improvements were largely volume-driven, with alumina sales increasing by an impressive 81% in H1. The management attributed approximately INR 700 crore of the H1 profit increase to higher volumes and INR 300 crore to improved efficiencies.

Strategic Expansions and Future Outlook

NALCO is actively pursuing significant expansion projects to bolster its production capacity and maintain its competitive edge. The 5th stream alumina refinery expansion, which will add 1 million tons to the existing 2.1 million tons, is approximately 80% complete and is targeted for commissioning by June 2026. This expansion will increase the total alumina capacity to 3.1 million tons. The company is also planning a 5 lakh ton aluminium smelter expansion, with commissioning projected by December 2030. The total capital expenditure for the smelter and a new power plant is estimated to be around INR 30,000 crore. The management emphasized that NALCO's zero-debt status and strong cash balance of approximately INR 7,900 crore will largely fund these ambitious projects, minimizing reliance on external financing.

Raw material security is a key focus, with plans to start the Pottangi bauxite mines by June 2026. Additionally, an alternate bauxite sourcing conveyor system with a capacity of 30 lakh tons per year is expected to be commissioned by April-May 2026, ensuring a continuous supply for the expanded refinery. In a strategic move towards diversification, NALCO, through the KABIL joint venture, is exploring lithium mines in Argentina. Non-invasive exploration has yielded positive results, and invasive exploration is underway, with commercial mining feasibility expected within 1 to 1.5 years.

Operational Efficiencies and Market Dynamics

NALCO has demonstrated strong operational discipline, particularly in cost management. The company achieved significant cost savings in alumina production by reducing caustic soda consumption, a major input material. This technical improvement is deemed sustainable. Furthermore, NALCO substantially reduced its reliance on grid power, utilizing its internal Captive Power Plant (CPP) more effectively. This led to a saving of INR 136 crore in H1 compared to the previous year, as power purchases from the grid were minimal. While alumina prices have been on the lower side, the company expects LME Aluminium prices to average around US$ 2670/MT for CY 2026, providing a favorable outlook for its metal segment.

Concluding Thoughts

NALCO's Q2 and H1 FY26 performance reflects a company in strong operational and financial health. The management's focus on volume growth, cost efficiencies, and strategic capacity expansions positions NALCO for continued success. With a robust balance sheet, proactive raw material management, and diversification efforts into critical minerals like lithium, NALCO is not just navigating the current market dynamics but also building a resilient future. The company's commitment to sustainable practices and strategic growth initiatives underscores its potential for long-term value creation for its stakeholders.