Nmdc steel shares review

Ans: cyclical sector, so i usually avoid !

Ans: Raghu : NMDC Steel has recently (feb 23) been spun off from NMDC parent company. I would like to check their first set of results to comment further

Ans: I will stay away from both.

Ans: NMDC Limited’s (NMDC) operational performance has been very strong, with robust 23%/32% y-o-y
growth in its iron ore production/sales volume in 5MFY24 and seems on track to achieve its guidance
production guidance of 47-49mmt/>50mt for FY24/FY25. The recent commissioning of the Nagarnar
steel plant further improves the iron ore sales volume growth outlook in H2FY24. Long-term volume
growth also remains strong given NMDC’s target to reach 100mt of iron ore production in the next five
years. Additionally, the recent price hike of 7-8% in iron ore price (reflects a recovery in international
iron ore prices) and benefit of operating leverage bodes well for margin. We thus expect NMDC to
clock 12%/15% EBITDA/PAT CAGR over FY23-26E. Valuation of 4.6x/4.1x FY25E/FY26E EV/EBITDA is
attractive and stock offers a healthy dividend yield of 5-6%.

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