Here's why NMDC shares advanced 4.4%
Motilal Oswal is optimistic about NMDC's favourable positioning, citing robust demand and upcoming capacity additions. The company has already implemented price hikes in the current quarter, with the anticipated impact to manifest in both Q3 and Q4.
National Mineral Development Corporation (NMDC’s) stock saw heightened activity during trading hours on Wednesday (December 13), spurred by a positive assessment from brokerage firm Motilal Oswal.
Motilal Oswal is optimistic about NMDC's favourable positioning, citing robust demand and upcoming capacity additions. The company has already implemented price hikes in the current quarter, with the anticipated impact to manifest in both Q3 and Q4.
Projections by Motilal Oswal suggest NMDC's production for FY24 could reach 46 million tonnes, with year-to-date figures already at 27 million tonnes. Looking ahead to FY25, the management anticipates a production capacity of 50 million tonnes, a figure that Motilal Oswal believes could be surpassed.
In terms of valuation, the brokerage firm deems NMDC to be at fair value, with metrics such as 5X EV/EBITDA and 1.6X P/B.
However, the brokerage firm highlights a key risk: Of the 110 iron ore blocks auctioned in the last seven years, only 30 are operational. Should all captive mines become operational, an increase in supply may exert pressure on domestic prices.
NDMC is an Indian public sector undertaking involved in the exploration of several minerals such as iron ore, copper, limestone, dolomite, gypsum, among others.
Motilal Oswal has assigned a buy rating to the stock, setting a target price of Rs 210 per share. The NMDC stock ended with advanced 4.4% at Rs 191.10. Over the past six months, it has witnessed a remarkable 75% surge.
(Edited by : Sangam Singh)
First Published: Dec 13, 2023 10:25 PM IST
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