Shares of this large-cap mining company surged by 1.4 percent after it gained traction this week to reach an intraday high of Rs 249.65 per share on Monday, following a bullish recommendation from ICICI Direct with an upside potential of 30 percent.
Incorporated in the year 1958, NMDC is engaged in the exploration and production of Iron Ore along with diamonds. They are also involved in the production and sale of Sponge Iron and the generation and sale of Wind Power. The company is headquartered in Hyderabad.
With a market capitalization of Rs 73,045.35 crores, the shares of NMDC Ltd went up by 1.4 percent and were trading at Rs 249.35. a piece on Monday’s Morning session. Also, today’s high price of the stock is Rs 249.65 apiece and the previous closing price of the stock is Rs 246.15 apiece.
Share price movements: The company’s stocks have generated a multi-bagger return of 131.4 percent over the past year and 17.66 percent over the past 6 months.
Financials: Reviewing the financials of NMDC on a year-on-year basis, the revenues rose by 20 percent from Rs 17,667 crores in FY23 to Rs 21,308 crores in FY24. In the same time frame, the net profits decreased from Rs 5,601 crores to Rs 5,571 crores demonstrating a 0.53 percent decline.
Indian brokerage firm ICICI Direct has Initiated a ‘buy’ recommendation on NMDC Ltd with a target price of Rs 325.00 per share, implying an upside potential of up to 30 percent from Monday’s current price of Rs 249.35 apiece.
According to a brokerage report by ICICI Direct, NMDC has set aggressive volume targets to meet the rising demand for iron ore. The production remained stable at 30-35 Metric Tonnes ( MT) from FY14-21 and eventually grew to 41 MT in FY22 and 45 MT in FY24. NMDC aims to reach 50 MT in FY25 and 54 MT by FY26.
Capex plans:NMDC also has capex plans to purchase more slurry pipelines, a pellet plant, and crushing and evacuation infrastructure in order to expand its capacity to 100 MT by FY31. This plan will be met by investing an amount of Rs 50,000 crores, as per the brokerage report.
EBITDA and PAT:NMDC reported an EBITDA of Rs 2,102 crores in Q4FY24, with EBITDA per tonne standing at Rs 1,676 compared to Rs 1,762 in Q3FY24 and Rs 1,742 in Q4FY23. Profit after tax (PAT) for the same time frame stood at Rs 1,416 crores.
According to NMDC management, they have set a target to produce 50 million tons of production in FY25. Also, NMDC aims to produce 54 million tons of iron ore by FY26. The Capex amount planned for FY25 will be Rs 2,000 to Rs 2,500 crore. NMDC also plans to invest a capex of Rs 50,000 crore in order to achieve its 100 million tons of production target in the next 5 to 6 years.
NMDC Steel is currently producing 1.2 lakh tonnes of steel every month. They will start repaying advances they took to NMDC by Q2FY25. NMDC Steel targets 1.8 to 2 million tonnes of steel production with 10 percent EBITDA margins by FY25. When the plant reaches 90 percent utilization they expect EBITDA margins to rise to 25 percent.
Future Plans: NMDC also has future plans to explore opportunities in other minerals such as bauxite, gold, diamond, lithium, and copper, both in India and overseas. They are also doing an early study on magnetite and lithium deposits which is expected to finish in the upcoming 12 to 18 months.
Shareholding pattern: As of March 2024, the firm’s shareholding pattern stood at 60.79 percent for promoters, 12.5 percent for the public, 12.60 percent for foreign institutional investors, and 14.11 percent for domestic institutional investors.
Written By Zahal.
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