Nuvama Institutional Equities raises its rating on NMDC to ‘Buy’ amidst stabilising iron ore prices and ambitious production targets, signalling potential upside despite a modest Q1 EBITDA shortfall.
Nuvama Institutional Equities has turned more upbeat on NMDC, upgrading the iron ore producer to “Buy” from “Hold” even after the company posted first-quarter EBITDA of Rs 2,470 crore for FY27, slightly below the brokerage’s estimate of Rs 2,620 crore. The firm said the shortfall was modest and that the broader set-up now looks better for the second half of FY27, as domestic iron ore prices appear to have found a floor and higher volumes should aid earnings.
The company’s operating profit was broadly unchanged from a year earlier, with EBITDA per tonne easing to Rs 2,106 from the previous year’s level. Nuvama said the result was helped by a 2% rise in volumes and a Rs 416-per-tonne improvement in blended realisation, but those gains were partly cancelled out by a Rs 652-per-tonne increase in royalty and premium costs.
Nuvama now values NMDC at 9 times its estimated FY28 earnings per share and set a target price of Rs 97, implying about 14% upside from Monday’s close of Rs 85.10. The brokerage’s call comes as NMDC continues to push towards larger production ambitions, with industry commentary pointing to a 60-million-tonne target for FY27 and a longer-term goal of 100 million tonnes by 2030, supported by mine expansions and new projects.
The balance-sheet picture remains an area of scrutiny. NMDC’s key receivables rose by Rs 130 crore quarter-on-quarter to Rs 9,560 crore, while total dues from Rashtriya Ispat Nigam Ltd and NMDC Steel eased by about Rs 117 crore to roughly Rs 11,160 crore. Nuvama said a move by NMDC Steel into profitability would help speed up payments. The stock has already been supported by expectations of firmer iron ore pricing, and the brokerage’s latest upgrade suggests it sees more room for gains if volumes keep improving.
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