State-owned miner NMDC continued to raise prices for iron ore, which will likely be positive for its stock price. Iron ore prices have been driven by strong demand for steel, which in turn drives demand and higher production.
On November 23, the company said it had fixed lump ore prices at Rs 5,400 per tonne from Rs 5,200 per tonne in October. Similarly, it raised prices of fines to Rs 4.660 per tonne from Rs 4,460 per tonne in October.
Earlier, the company had revised prices in October and September as well.
NMDC said its sales volume in October was at 3.44 million tonnes (mt), much higher than 3.04 mt in October 2022. Cumulative April-October sales volume at 23.99 mt is 23.4 percent higher than 19.44 mt in the year-ago period.
The higher iron-ore prices and higher volumes mean higher revenue for the company.
Analysts at ICICI Securities said it believes that post the de-merger of the steel plant, NMDC’s focus is back on increasing its iron ore production/evacuation infrastructure.
“As a result, we believe that the company would be able to record 48mt/52mt of sales volume in FY24E/FY25E. That said, the stock’s recent impressive run-up has reduced its upside. Taking cognizance
of higher cash & equivalents, we raise our target to Rs 190 (earlier Rs 180) on an unchanged 5.5x FY25E EBITDA,” said the broker.
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