NMDC Ltd. share price target

NMDC Ltd (National Mineral Development Corporation) is India's largest iron ore producer and exporter. It operates key mines in Chhattisgarh and Karnataka and has a strategic presence in minerals like diamonds and base metals. It plays a critical role in supplying raw material to the domestic steel industry....

Revenue stood in line with our estimate at INR67.4b, rising 25% YoY but declining 4% QoQ. Muted volumes QoQ were offset by healthy NSR.

aided NMDC to deliver an EBITDA/t of Rs2,152. NMDC reported a strong Q1FY26 operating performance, driven by robust volume growth and better-than-expected pricing. Volumes grew 14% YoY supported by strong domestic steel demand supported by increased GoI spending and a lower base (volumes impacted by strike). Realizations rose 7.4% QoQ, led by price hikes undertaken for lump and fines from May'25. Moderate increase in employee cost and lower ramp up of KIOCL pellet plant...

Revenue stood in line with our estimate at INR70b, up 8% YoY and 7% QoQ, primarily driven by healthy volumes and NSR growth.

Revenue of Rs. 4,807 crore (+19.7%/-10.6% y-o-y/q-o-q) was inline with estimates. Iron ore sales of 9.7 mt grew by only +1.8%/-3.3% y-o-y/q-o-q. Realization of Rs. Rs. 4,935/tonne grew +17.7%/-7.6% y-o-y/q-o-q.

In 2QFY25, NMDC reported production volume of 8.3mt, down 10% QoQ and 6% YoY, totaling 17.5mt for 1HFY25 (down 11% YoY).

Consolidated PAT at Rs. 1,971 crore was up 19% y-o-y and led by a beat in EBITDA margins due to decrease in royalty payments.

Revenue was in line with our estimate at INR54b, flat YoY/down 17% QoQ. The QoQ decline was primarily due to weak volumes.

We upgrade NMDC to BUY from ADD as: 1) Sales volume in FY24E may breach the 32 40mnte range; 2) long-term volume visibility is clearer as the roadmap for 100mtpa by FY30, though aspirational, is being worked on; 3) commercial mining in Odisha is progressively getting undermined, resulting in more opportunity; and 4) RoE may improve further from the current level of 22% as mining business takes the centre stage and steel plant is demerged.