NMDC Ltd. share price target

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.

NMDC’s Q1FY24 EBITDA of INR 19.9bn (up 4.9% YoY) was 17.5% and 9.8% ahead of our and consensus’ estimates. Key points: 1) Best-ever quarterly performance barring Q4FY23; 2) focus on volume growth

NMDC’s Q4FY23 EBITDA was in line with our estimates, and 7% ahead of street estimates. Key highlights: 1) Best-ever production and sales volume; 2) Chhattisgarh segment comprised 68% of total sales volume (Q4FY22: 69%; Q3FY23: 70%); 3) EBITDA margin rebounded QoQ to 37%.