India’s industrial minerals sector is vibrant, with production of 95 minerals. In January 2025, mineral production value was Rs. 13,570 crore, up 1.2 percent from January 2024. The sector contributes about 3 percent to GDP and employs millions. Key minerals include iron ore, bauxite, and chromite, with significant growth potential.
With a market capitalization of Rs 57,498.49 crore, the shares of NMDC Ltd closing at Rs 65.40 per share, decreased around 0.86 percent as compared to the previous closing price of Rs 65.97 apiece.
Brokerage recommendations
Kotak Institutional, one of the well-known brokerages globally, gave a ‘Sell’ call on the mining stock with a target price of Rs 55 apiece, indicating a potential downside of 15 percent from Tuesday’s closing price of Rs 65 per share.
Brokerage Rational
Kotak predicts India’s iron ore surplus to rise in FY26-27 due to lower exports and increased merchant mining. Lloyds Metal’s Gadchiroli mine will expand production from 10 to 25 mtpa in this period. Meanwhile, NMDC’s volumes stayed flat in FY25’s first 11 months, missing its 10% growth target.
Moreover, seaborne iron ore prices may stay under pressure from 2025-27 due to weakening Chinese demand and rising domestic supply. Protectionist measures against China’s steel exports and sluggish consumption could reduce steel production. Additionally, expanded Tier-1 iron ore output and potential steel capacity cuts may further increase market surplus in China.
Furthermore, Karnataka’s proposal for a 22.5 percent royalty and Rs 101/tonne mineral right tax could reduce NMDC’s EBITDA by 14 percent in Karnataka and 47 percent nationwide in FY26. Awaiting approval, Kotak has cut FY26-27 EBITDA estimates by 11 percent and 8 percent, citing weaker volumes, subdued prices, and downside risks to earnings.
Also read: Stock hits 5% upper circuit after winning order worth ₹20 Cr for Waste to Art World Park
Capex Plan
The company has locked in Rs 3,112 crore in CAPEX for the year, expected to reach Rs 4,000 crore by year-end. A vendor conference with 150 participants unveiled a Rs 70,000 crore CAPEX plan over 5-6 years, targeting 100 million tons of production, ensuring long-term growth and capacity expansion.
Future Production Outlook
Management targets 16-17 lakh tons of production in Q4 FY25, expecting to meet this goal based on current performance. For FY26, projected production stands at 53 million tons, with potential for further growth depending on regulatory approvals, reflecting a focus on scaling operations efficiently.
Management comments
NMDC’s management remains optimistic about its growth trajectory, backed by aggressive expansion and operational improvements. The company expects a strong Q4 and FY26, focusing on achieving production targets and cost management. Despite challenges, it remains confident in sustaining growth and navigating market fluctuations effectively.
Company Profile
NMDC Limited is an India-based producer of iron ore. The Company is involved in the exploration of a range of minerals including copper, rock phosphate, limestone, magnesite, diamond, tungsten, and beach sands amongst others. The Company’s segments include Iron Ore, Pellet, and Other Minerals & Services.
Written by Abhishek Singh
Disclaimer
The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Dailyraven Technologies or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.
