NALCO's reports 76% jump in profit on shrinking costs, higher aluminium prices

State-owned National Aluminium Company (NALCO) reported a 76 per cent jump in first-quarter profit on Monday as the company benefitted from shrinking costs and higher prices for the metal.

The state-owned firm's consolidated profit jumped to Rs 588 crore (about $70 million) year-on-year for the three months ended June 30.

Global prices of base metals, including aluminium, rose sharply during the quarter due to supply concerns and rising demand, analysts said.

Higher commodity prices tend to raise the selling price of metals, which help boost miners' margins.

The company reported a 35 per cent decline in the cost of thermal coal and bauxite - key raw materials for aluminium. Its expenses, as a result, fell 24 per cent.

However, its revenue from operations fell 10 per cent to Rs 2,856 crore, owing to a 27 per cent drop in its chemicals business, its second-biggest segment.

While the company's mainstay aluminium business contributed to nearly 90 per cent of overall revenue, it grew a mere 4 per cent during the quarter.

Going forward, domestic aluminium demand growth is expected to remain steady due to strong demand from the electrical, building and construction sectors and a demand recovery in consumer durables, Sumit Jhunjhunwala, assistant vice president and sector head of corporate ratings at ICRA, said.

Rival firm Vedanta beat first-quarter profit estimates on higher aluminium prices, while Hindalco is set to report quarterly results later this week.