Prabhudas Lilladher's research report on NMDC
NMDC reported Q1FY21 earnings below our estimates due to one-time donation of ~1.5bn to PM cares fund. The earnings stood low on information because of temporary impact on volumes and sharp price hikes, undertaken at the beginning of Q2FY21.
We estimate further price hike of Rs200-300/t in September given the abnormal discount. Considering the uncertainty regarding incidence of additional royalty in Chhattisgarh operations, we cut our EV/EBITDA multiple to 4.5x (earlier 5x). Led by better outlook on iron ore and value unlocking with the demerger of steel plant, we maintain Accumulate rating with revised TP of Rs125 (earlier Rs105).