Nalco Ranged On Public Issue Scuttlebutt

The possibility of an equity expansion has led to a stagnancy in the scrip of the state-run National Aluminium Company (Nalco). The stock remained rangebound and closed 1.73 per cent higher at Rs 114.20 on the Bombay Stock Exchange (BSE).

The volumes at the counter on the National Stock Exchange and BSE stood at 1.60 lakh shares and 64,693 shares, respectively.

Analysts say that, in the short term, the scrip may be pressured by an overhang of equity expansion owing to the planned public and ADR issues. Nalco's public issue is likely to hit the market in December 2002.

The government is planning a public issue of 10 per cent of the company's equity followed by an issue of American depository receipts (ADR) of 20 per cent of the equity.

 

Meanwhile, analysts expect aggressive bidding to take place for the strategic sale of government stake. Analysts expect bids for the government's stake in Nalco within Rs 180-200.

The Centre has already invited initial bids or expressions of interest for its 29.15 per cent stake in Nalco. The government has set the deadline for putting in initial bids as 15 September. The government has also fixed a net worth criteria of $250 million for bidders.

International companies such as Alcan of Canada, Alcoa of the US, Pechiney of France, Broken Hill Properties of Australia and Rio Tinto of UK are bidding for the 29.15 per cent stake. To ensure wider participation, the government has decided against limiting bidders only to the aluminium and metals sector. Hindalco and Sterlite Industries are also in the fray.

Post divestment, the government holding in the company will fall to 26 per cent. Currently, it holds 87.15 per cent in Nalco.

The stock has been moving in a band of Rs 110-120 over the last few trading sessions. The currently rangebound movement follows a sustained rally by the scrip over the previous few trading sessions on the back of divestment expectations. The scrip had surged 130.9 per cent to a 52-week high of Rs 126.55 on 23 July 2002 from Rs 54.80 on 31 January 2002.

Nalco is the lowest cost producer of aluminium in the world. It is Asia's biggest alumina producer and owns a bauxite mine, an aluminium refinery, an aluminium smelter, its own captive power plants and a port facility. Nalco is the largest alumina maker in the country, and the second largest aluminium producer.

Nalco reported an 11 per cent increase in sales to Rs 600.16 crore for the first quarter ended 30 June 2002 over the corresponding previous quarter.

Its Aluminium production increased marginally by 0.31 per cent to 57,129 tonne for the quarter ended 30 June 2002 over the corresponding previous quarter. However, owing to a fall in aluminium prices on the London Metal Exchange (LME), its profitability was affected in Q1. Net profit fell 36 per cent to Rs 99.13 crore.

The company expanded its bauxite mines and alumina refinery from 24 lakh tonne and 8 lakh tonne to 48 lakh tonne and 15.75 lakh tonne, respectively, in April 2002.