NMDC Q2 Results Review - Revenue Inline; High Costs Dent Earnings: Motilal Oswal

Motilal Oswal Report

Despite weak volume in H1 FY25, the revenue growth remained healthy, led by better realization. NMDC Ltd. raised iron ore prices twice in Oct-24, with cumulative hikes of Rs 1,000/tonne for lumps and Rs 800/tonne for fines. These price hikes will support realizations going forward.

India’s crude steel capacity is expected to reach 300 mt by FY30-31, which will increase the iron ore requirement to ~435-445 mt. As NMDC holds 16% of the market share, we believe it is well placed to capitalize on the opportunities ahead.

NMDC has planned capex for various evacuation and capacity enhancement projects, which are expected to improve the product mix and increase its production capacity to ~100mt by FY29-30E.

With challenges owing to pending EC clearances and monsoons behind, volume growth is likely to be robust going forward. At CMP, NMDC trades at 4.2x EV/Ebitda on FY27E.

We marginally cut our FY25E Ebitda/PAT by 6% each due to weak Q2 FY25 performance. We reiterate our Buy rating on NMDC with a revised target price of Rs 280 (based on six times Sep’26 EV/Ebitda).

Click on the attachment to read the full report:

DISCLAIMER

This report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit. 

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.