NMDC Q3 Results Review - Volume Driven Growth, Margin Expansion: Systematix

Systematix Research Report

NMDC Ltd. reported Q3 FY24 Ebitda at Rs 20 billion +62%/+69% YoY/QoQ, 15% above our estimate due to lower-than-expected costs and improved operating leverage at higher volumes. Iron ore sales volumes came in at 11.4 million tonne (+18.9% YoY, +19.1% QoQ).

NMDC recorded its highest-ever third-quarter production of 12.2 mt (+15% YoY, +38% QoQ) in Q3 FY24. International iron ore prices remained subdued for much of the year till September 2023 but have fairly recovered since then due to better demand outlook, especially in China.

NMDC has consistently increased prices since September, in line with the movement in international prices. Over this period, both lumps and fines prices were increased by ~Rs 1,400/tonne.

Ebitda margin for the quarter expanded to 37.1%, an increase of 375 basis points/745 bps YoY/QoQ. Cost of production excluding selling expenses and royalties fell 33% QoQ to Rs 873/t against 38%/19% growth in production/sales volume. Employee costs per ton also fell to Rs 350/tonne versus Rs 410/tonne in Q2 FY24.

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