Hold NMDC; target of Rs 110: ICICI Direct
ICICI Direct’s research report on NMDC
NMDC reported a steady set of Q2FY20 numbers wherein the topline came in higher than our estimate on the back of higher-than-expected realisations. Realisations were at Rs 3780/tonne (up 5.7% YoY, 2.7% QoQ, higher than our estimate of Rs 3650/tonne). Iron ore sales volume was at 5.8 million tonnes (MT), down 13% YoY (our estimate: 5.9 MT). Net income from operations were at Rs 2242 crore, down 8% YoY (our estimate: Rs 2135 crore). EBITDA came in at Rs 1060 crore, down 16% YoY, (our estimate: Rs 1086 crore). Ensuing PAT was at Rs 701.7 crore, up 10% YoY (our estimate: Rs 758 crore).
NMDC reported a steady set of Q2FY20 numbers wherein realisations came in higher than our estimates. Going forward, we model sales volume of 32.0 MT for FY20E and FY21E. Furthermore, we expect EBITDA margins to hover around 47-49% for the next couple of years. We value the stock on an SoTP basis thereby arriving at a target price of Rs 110. We maintain our HOLD recommendation on the stock.
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