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ICICI Securities Report
NMDC’s Q4FY23 EBITDA was in line with our estimates, and 7% ahead of street estimates. Key highlights: 1) Best-ever production and sales volume; 2) Chhattisgarh segment comprised 68% of total sales volume (Q4FY22: 69%; Q3FY23: 70%); 3) EBITDA margin rebounded QoQ to 37%; 4) FY23 end net cash stands at Rs66.3bn; 5) exceptional income of Rs12.4bn in FY23 aided EPS to Rs18.9/share and 6) Board has recommended second interim dividend of Rs2.85/share, taking the total FY23 dividend to Rs6.6/share.
Going ahead, despite price headwinds, we see the company focusing on adding volumes. While we consider the target of 46-50mnte production volume in FY24 as daunting, we believe NMDC is likely to gain from overall steel production growth in the country, expected at 6-7% in FY24E. We introduce FY25 estimates at this stage and roll-over the valuation to FY25E. Our revised TP works out to Rs118 (earlier Rs130) on an unchanged 5x FY25E EBITDA. Maintain ADD.
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