Feb 16, 2017 01:14 PM IST | Source: Moneycontrol.com
Hold NMDC; target of Rs 130: Edelweiss
Edelweiss recommended hold rating on NMDC with a target price of Rs 130 in its research report dated February 14, 2017.
Edelweiss' research report on NMDC
NMDC’s Q3FY17 EBITDA of INR 10.2bn came 10% below consensus due to higher than expected royalty cost, despite the beat in revenue. Going forward, we believe the high cost structure will persist as the company will account for service tax (15% of royalty) and higher mine closure obligation (INR 25/t instead of INR 15/t).
Factoring in higher costs and start of captive mining by one of the company’s major customer in FY18, we have pruned our FY18E EBITDA by 16%. At CMP, the stock trades at 7.7x FY19E EBITDA, which is at higher end of the multiples for global peers. Maintain ‘HOLD/SP’ with unchanged TP of INR 130.
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