Buy NMDC; target of Rs 84: Motilal Oswal

Motilal Oswal's research report on NMDC

Revenue stood in line with our estimate at INR67.4b, rising 25% YoY but declining 4% QoQ. Muted volumes QoQ were offset by healthy NSR.Iron ore production stood at 12mt (+31% YoY and -10% QoQ), while sales stood at 11.5mt (+14% YoY and -9% QoQ) during the quarter. ASP for the quarter reached INR5,851/t (+9% YoY and +6% QoQ) as iron ore prices remain elevated. EBITDA stood at INR24.8b (+6% YoY and +21% QoQ), in line with our estimate. EBITDA/t rebounded to INR2,152/t (-7% YoY and +33% QoQ), against our est. of INR1,956/t during the quarter. APAT for the quarter stood at INR19.7b (flat YoY and +33% QoQ), against our estimate of INR18b during the quarter.

Outlook

At CMP, the stock trades at 4.1x EV/EBITDA on FY27E. We reiterate our BUY rating on NMDC with a TP of INR84 (based on 4.5x EV/EBITDA on FY27E).