Sharekhan has given Buy recommendation for NMDC with a target price of Rs. 200 in its research report issued on Mar 04, 2022

Sharekhan’s research report on NMDC

NMDC has taken cumulative price hikes of 14%/12% or Rs. 700/Rs. 500 per tonne for iron ore lump/fines over Jan-Feb 2022 and still the domestic iron ore price is at steep discount of 43% to international iron prices. This points towards a firm iron ore pricing environment and bodes well for gradual margin recovery for NMDC. Robust iron ore sales volume (up 17% y-o-y in Q4FY22QTD) and potential margin recovery re-enforce our confidence for strong earnings performance in Q4FY22. Steel plant demerger expected by Q1FY23 would not only help unlock value but would also reduce the cash burn for steel plant, improve return ratios and increase cash flows (could result in likely high dividend pay-outs).

Outlook

We maintain a Buy on NMDC with an unchanged PT of Rs. 200, noting the stock’s inexpensive valuation of 2.4x its FY2023E EV/EBITDA for the core business and a high dividend yield of ~10%.

More Info

At 13:19 hrs NMDC was quoting at Rs 150.95, up Rs 2.95, or 1.99 percent.

It has touched an intraday high of Rs 151.90 and an intraday low of Rs 146.45.

It was trading with volumes of 611,350 shares, compared to its thirty day average of 661,574 shares, a decrease of -7.59 percent.

In the previous trading session, the share closed down 2.98 percent or Rs 4.55 at Rs 148.00.

The share touched its 52-week high Rs 213.15 and 52-week low Rs 122.05 on 12 May, 2021 and 25 March, 2021, respectively.

Currently, it is trading 29.18 percent below its 52-week high and 23.68 percent above its 52-week low.

Market capitalisation stands at Rs 44,237.50 crore.

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