Buy NMDC; target of Rs 125: Sharekhan

Sharekhan is bullish on NMDC has recommended buy rating on the stock with a target price of Rs 125 in its research report dated May 24, 2023.

Broker Research

May 27, 2023 / 16:55 IST

buy

26 Aug, 2025 12:21

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Sharekhan's research report on NMDC

Q4FY2023 consolidated EBITDA of Rs. 2,162 crore (up 89.6% q-o-q) was 19% above our estimate, led by a strong beat in EBITDA per tonne. Adjusted PAT of Rs. 1,414 crore (up 55% q-o-q) was in line, as beat in EBITDA got offset by higher-than-expected tax rate, depreciation cost and negative other income. EBITDA/tonne increased by 46% q-o-q to Rs. 1,742 and was 21.8% above our estimate. Iron ore sales volume (missed estimate by 2.3%) while blended realisations grew by 29.5%/21.4% q-o-q to 12.4 MMT/ 4,715 per tonne. Lump/Fine price has remained stable at Rs. 4,500/4,100 per tonne since March 2023 but management sees considerable pricing headwinds in the near term. FY24 iron ore production volume guidance of 46-50 mt implies 13-22% y-o-y growth. The Nagarnar steel plant would be commissioned by June-23 with expectation of 4.5-5 mt iron ore volumes for NMDC.

Outlook

We maintain a Buy rating on NMDC with a revised PT of Rs. 125 given inexpensive valuation of 3x/1x its FY25E EV/EBITDA and P/BV, respectively and the stock offers healthy dividend yield of ~6-7%.

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