Sharekhan has given Buy recommendation for NMDC with a target price of Rs. 165 in its research report issued on Apr 05, 2021

Sharekhan’s research report on NMDC

NMDC has taken cumulative price hike of Rs. 750/Rs. 350 per tonne for iron ore lump/fines over March-April 2021; and current iron ore lump/fines prices are 51%/35% higher versus average price seen in FY2021. Strength in domestic iron price to sustain given supply deficit and steep discount (of <60%) to international price. Volume ramp-up to continue as restart of Donimalai mine to drive sales volume growth of 30% y-o-y/7% y-o-y in FY2022E/FY2023E. Robust iron ore sales volume (up 19% q-o-q to 11.1mt in Q4FY2021) and higher prices (lump/fines price up by 28%/17% q-o-q in Q4FY2021) re-enforce our confidence for strong earnings performance (expect EBITDA growth of 33% q-o-q in Q4FY2021).


Valuation of 3.9x its FY2023E EV/EBITDA for the core business is attractive versus average of 5.6x for global mining companies. Potential value unlocking from the steel plant is the key catalyst. We maintain Buy on NMDC with an unchanged PT of Rs. 165.