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NMDC: Free cash flow, higher dividend yield to give valuation a leg-up

Higher steel production will lead to higher iron ore consumption; domestic prices are at a steep discount to import prices.

November 23, 2022 / 05:58 PM IST
NMDC: Free cash flow, higher dividend yield to give valuation a leg-up

NMDC | CMP: Rs 108.95 | The stock price declined 4 percent after the company registered a 62% year-on-year decline in profit at Rs 885.7 crore for quarter ended September FY23, impacted by lower top line as well as operating income. Numbers were below analysts' expectations. Revenue from operations for the quarter at Rs 3,328 crore declined 51% and EBITDA fell 73% to Rs 851.2 crore compared to year-ago period.

PRO Only Highlights
Quarterly performance largely backed by improved realisations
Medium-term triggers China plus and protectionist measures for tyre industry
Valuations not inexpensive; but improved medium-term outlook

Key highlights Volume guidance lowered for FY23 September-quarter results below expectations De-merger of the steel plant completed Investors with higher risk appetite can buy NMDC (CMP: Rs115; Market capitalisation: Rs 33776 crore) has reduced the prices of iron ore lump and fines, effective November 17, 2022, by Rs 300 each per tonne to Rs 3800 per tonne and Rs 2610 per tonne, respectively. These price cuts were made to jack up volumes, given that the off-take had remained flattish in 1HFY23. Though NMDC has...

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