Accumulate NMDC; target of Rs 75: Prabhudas Lilladher

Prabhudas Lilladher's research report on NMDC

NMDC’s reported weak Q4FY25 operating performance mainly due to weak pricing and flattish volumes. Realization declined 7% QoQ on product mix deterioration and price cuts of Rs350/t undertaken for lump and fines in Q4FY25. NMDC received lower premium over quoted prices in a weak pricing environment during the quarter. Volumes grew just 1% YoY due to a 14-day employee strike over wage settlement. Higher other expenses (on account of traded steel sales from NMDC Steel and KIOCL’s pellet plant costing) and employee costs, impacted EBITDA/t by 4% YoY to Rs1,619 (PLe Rs1,732). With a sharp rise in debtor days due to RINL/NSL, NMDC’s cash conversion cycle has also deteriorated in FY25.

Outlook

We factor in 49.3/54mt volumes for FY26/27E and raise EBITDA estimates by 8%/6% on price hikes undertaken in May’25. At CMP, the stock is trading at 5.2x/4.7x EV of FY26/27E EBITDA. Maintain ‘Accumulate’ with a revised TP of Rs75 (earlier Rs69) valuing it at multiple of 5x EV of Mar’27E EBITDA.

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