Natl. Aluminium (NATIONALUM)

FairStock Score: 94/100 — HIGH CONVICTION

Score breakdown: P/E: 3/3 · ROCE: 2/2 · Growth: 1/2 · Dividend: 1/1

Key Financials

Strengths

• Zero debt and free cash flow of ₹1,835 Cr provide strong financial resilience.
• ROE of 34.49% and ROCE of 43.96% indicate exceptional capital efficiency and likely structural cost advantage.
• Strong momentum: sales growth of 19.86%, profit growth of 46.32%, and latest quarterly net margin of about 33.7%.
• Piotroski F-Score of 8/9 and Altman Z-Score of 4.46 reflect robust financial health.
• Promoter holding of 51.28% and dividend yield of 2.96% align interests and provide some downside cushion.

Concerns

• Price of ₹439.05 is 31.28% above the Graham Number of ₹270.12, leaving no margin of safety on a conservative basis.
• P/B of 4.53 is steep for a commodity/cyclical business with book value of ₹96.95.
• DCF intrinsic value of ₹105.66 is far below market price, signaling possible overvaluation despite model sensitivities.
• Aluminium is cyclical; the current low P/E and high profit growth could reverse when commodity prices decline.

AI Analysis

Let me tell you what I see at National Aluminium. This is a well-run, zero-debt operator—Debt/Equity 0.00—with an ROE of 34.49% and ROCE of 43.96%. Those are numbers of a genuine low-cost producer; the moat comes from cost position and operating efficiency, not from brand. The Piotroski F-Score of 8/9 supports the view that the financial statements are clean. Latest quarter sales of ₹4,731 Cr and net profit of ₹1,595 Cr translate to a strong margin; profit growth of 46.32% on sales growth of 19.86% shows operating leverage. Five-year revenue CAGR of 13.39% is solid. Free cash flow of ₹1,835 Cr confirms earnings are real. A 2.96% dividend yield, 51.28% promoter holding, and a 95/100 FairStock Score all make it attractive from an operating angle. But Graham's most important lesson is price versus value. The stock at ₹439.05 is near its 52-week high of ₹445.15. It trades at 4.53 times book value, even though book value is only ₹96.95. The Graham Number—a conservative value proxy—is ₹270.12, meaning I am being asked to pay a 31% premium. A DCF value of ₹105.66 is far lower still. A low P/E of 10.60 is exactly what you see in commodity stocks near the top of the cycle; earnings may not be sustainable. This is a high-quality cyclical, not a predictable consumer franchise. I would need a meaningful pullback to create the margin of safety I demand. Excellent company, poor setup today.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer