NMDC Share Price Falls After Q2 Revenue Misses Estimates

NMDC Ltd.'s share price dropped by 4.35% following the announcement of its second quarter financial results, which fell short of analysts' expectations. The iron ore major reported a 17% year-on-year rise in net profit to Rs 1,196 crore, missing the Rs 1,432 crore consensus estimate by Bloomberg. Revenue increased by 23% to Rs 4,919 crore, although it also came in below the expected Rs 5,058 crore.

The growth was driven primarily by its iron ore segment, which saw an 18% rise in revenue to Rs 4,749 crore, while its pellets and other minerals segment posted a 3.2-fold increase to Rs 199 crore. However, this segment recorded losses of Rs 141 crore, with higher sequential and annual losses.

The board approved a bonus share issue in a 2:1 ratio, meaning two fully paid-up shares will be issued for each existing share. A total of over 586 crore shares will be distributed by Jan. 10, 2025, funded through Rs 103.4 crore from the Capital Redemption Reserve and Rs 482.7 crore from the General Reserve. Additionally, the board approved increasing NMDC's authorised share capital from Rs 400 crore to Rs 1,000 crore, subject to requisite approvals.

India's largest iron ore producer, NMDC, has a 60.79% government ownership stake.

• Retained 'sell' rating on the company, lowering the target price to Rs 195, indicating a 16.7% downside.

• Second-quarter Ebitda missed expectations due to weaker realisations, higher costs, and lower volumes.

• Average realisations for the quarter were Rs 4,855 per tonne, down Rs 450 per tonne sequentially.

• NMDC’s prices are expected to correct as they currently hold a 25% premium over export parity.

• Citi reduced Ebitda estimates for the financial years 2025 to 2027 by 1-2%.

NMDC share price fell as much as 4.35% during the day to Rs 222.80 apiece on the NSE. It was trading 3.56% lower at Rs 224.63 apiece, compared to an 0.10% advance in the benchmark Nifty 50 as of 10:08 a.m. 

It has risen 30.5% in the last 12 months and 7.07% on a year-to-date basis. The total traded volume so far in the day stood at 2.6 times its 30-day average. The relative strength index was at 46.83.

Ten out of the 22 analysts tracking NMDC have a 'buy' rating on the stock, four recommend a 'hold' and eight suggest a 'sell', according to Bloomberg data. The average of 12-month analyst price targets implies a potential upside of 5.6%.