Record Q1 profit on commodity rally; cost inflation offset by alumina upside

Revenue 5,302.4 Cr, 39.3% YoY growth

PAT growth 90.9%, OPM 51.1%, NPM 36.6% – profitability outperformed

PAT 2003.1 Cr with 90.9% growth confirms record Q1

Alumina prices have risen from $310-320 guidance to $323-370 range – significant upside

Cost inflation disclosed but not yet fully reflected in delivered Q1 – suggests sequential margin pressure ahead

Prior guidance $310-320/ton avg; now realizing $323 Q1, $370+ Q2 (Russia/China refinery cuts, red mud issues, higher bauxite). ~$50/ton upside vs plan = ₹230 Cr cost offset in Q1 alone.

Was June start → now Sep mechanical completion, Nov-Dec production. 6-month delay but 200k ton output target maintained; suggests project complexity but on cost/scope.

CP coke INR44K→66-70K (+50%), caustic INR42K→49K (+17%), HFO INR46K→75K (+63%). ~INR15-16K/ton cost rise already embedded; further Q2 inflation expected. Partially offset by alumina pricing.

War-driven premium: $60 (6mo ago) → $110 now (+$50). Expected to normalize post-conflict but sustained at $370+ levels in alumina market suggests demand support.

0.5MT + 1,080MW power plant (NLC JV) now at DPR stage; INR25K Cr capex, board approval Oct-Nov, production 2030. Clear multi-year growth vector not previously quantified.

Mechanical completion delayed 2-3 months; integrated trial + ramp 3-4 months. Production starts Nov-Dec; 200k tons FY27 target maintained despite delay.

Caustic INR45K→49K, CP coke INR44K→66-70K, HFO INR46K→75K. INR15-16K/ton cost rise expected. But alumina prices $370 (vs $310-320 guide) offset INR230 Cr burden in Q1.

Russia/China supply cuts (red mud issues), New Guinea bauxite price rise. Supply deficit 0.88MT globally supports $370. If maintained, offsets input cost inflation. Expected $370 avg Q2.

Smelter coal secure (60-70% captive). Refinery stock low due to government rake priority to power plant; improving as restrictions ease. No major disruption disclosed.

DPR in 3-4 months, board approval Oct-Nov. Total capex INR25,000 Cr (INR17-18K smelter, INR6K power via JV). Power: 50-50 JV, 30% equity / 70% debt. Completion by Dec 2030. No capex FY27.

Sold 14 lakh tons FY26; targeting 16 lakh FY27 + 2 lakh from 5th stream = 18 lakh total. Volume fluctuates; no hard sales guarantee disclosed.

Export tender fixes premium for 3-4 months. Recently $110 (war-driven vs $60 prior). This premium loaded on LME for domestic pricing. Revised at each tender.

Depends on bauxite quality. New phases in mines have better quality. South Block 2 coming online with superior bauxite. Ratio improvement sustainable as new blocks ramp.

1-2 term contracts early Q1. Last 2-3 months spot tenders only; %age LME too low (10%). Will book term only if percentage improves to 12-13%.

NALCO won't enter recycling; quality/purity assurance poor. Only secondary producers use recycling. No plans for NALCO; no threat to sales.

Smelters return Q4 FY27 (8+ months away). Supply deficit 0.88MT till then. LME likely $3,000-3,200 rest of FY27. Deficit supports pricing.

Captive cost INR1,600/ton (landed). FSA/linkage INR1,600-1,700. E-auction INR3,500-3,600. Captive saving ~INR1,500/ton vs auction. Last year: 55% linkage, 45% e-auction.

Road construction 15-20 days once clearances complete. August 2026 restart with authorities. Production target Oct-Nov 2026. Environmental resistance ongoing.

Mining plan approved. EC approval expected in 2-3 months. Q1 production 8.8 lakh tons (shortfall due to technical issues first 5 days). On track for 4.8 MT.

Current cost INR20,000-22,766 (FY26 INR20K, Q1 INR22.7K). New refinery: pressure digestion saves caustic (103-105 kg → 85-90 kg/ton alumina). Cost saving INR1,000-1,500/ton alumina. Overall cost INR20-23K range (same as current after depreciation).

Current capacity 2.1 MT; produced 2.3 MT (0.2 MT over). 5th stream adds 1 MT. Total rated 3.1 MT; targeting 3.2-3.3 MT. Sales: 1.4 MT sold prior, 1.6 MT FY27 plan, 1 MT required for own smelter, rest in open market.

Projected to earn INR6,000+ Cr PAT annually. Post-dividend + regular capex INR1,500 Cr, adding INR3,500+ Cr cash per year. Power plant JV funded 30% equity/70% debt. Smelter via internal accruals only. No external borrowing needed.

Current capacity 4.6 lakh tons. Produced 4.72 lakh tons FY26, targeting 4.76-4.77 lakh FY27 (excess above rated). Can reach 4.75 lakh tons max with 958-959 pots. No further brownfield growth (unlike alumina 2.1→3.1 MT).

Prior year 14 lakh; incremental sales dependent on 5th stream Nov-Dec ramp & new market expansion. Smelter requires only 0.9-0.95 MT; bulk for open market sales.

Operating 958-959 pots at peak; incremental above 4.6 MT rated capacity from efficiency. Limited brownfield upside; stable vs FY26 (4.72 MT).

July-Aug spot tenders at $370-380; Russia/China supply cuts, New Guinea bauxite inflation. Supply deficit 0.88 MT supports sustained pricing if geopolitical risks persist.

Caustic soda INR45K→49K (+9%), CP coke stable at INR66-70K, HFO continuing pressure. Metal cost +INR15-16K/ton already embedded; alumina $370 pricing may partially offset.

5th stream refinery will deliver similar cost (INR20-23K) post-depreciation. Pressure digestion caustic savings offset by depreciation, no structural margin improvement vs current.

Q1 spend ₹350 Cr on track. No major new capex FY27; smelter expansion & power plant DPR phase only (INR300-400 Cr for tech licenses & DPR).

Major capex FY28-FY30: INR4-5K Cr/year for 0.5 MT smelter + 1,080 MW power plant. Board approval target Oct-Nov 2026; production target Dec 2030.

Alumina +$50/ton above guidance on Russia/China supply cuts and war-driven shortage. If Middle East smelters return & conflict resolves, premium reverses. Aluminum $3,200 vs $3,100 guidance; demand weakness could drop to $3,000.

Q1 costs already embedded. Q2-Q3 will see further caustic (INR49K vs INR45K Q1), CP coke stable. HFO volatile. INR15-16K/ton metal cost rise already priced in. If alumina prices soften or metal demand drops, cost inflation unabated.

Already 6-month delayed (June → Sep mechanical completion). Integrated trial + production stabilization (60-70%) adds 3-4 months. Nov-Dec production start risks December slip-through; full ramp into Q4 or Q1 FY28 could affect FY27 sales target.

Refinery coal stock 2-3 days vs 10-15 day target. Government priority given to power plants; NALCO dependent on railways for allocation. Q2 monsoon could worsen rake availability. Smelter coal secure (60-70% captive) but refinery at risk.

Pottangi mine (200+ MT bauxite reserve, better quality) critical for cost reduction in 5th stream. Road construction blocked by environmental activists & district authorities; multiple attempts with state govt & police. Road 15-20 days once cleared; production Oct-Nov 2026 target at risk.

Employee cost reduced INR3L/person (FY26 INR36L → Q1 INR33L) due to superannuation + entry-level hiring. Expected to persist Q2-Q3. But 1 Jan 2027 pay revision due (+15% expected); Q4 FY27 cost will spike, reversing savings.