NMDC Ltd Shares Hit 52-Week High Amid Strong Production and Sales Growth

NMDC Ltd Shares Hit 52-Week High Amid Strong Production and Sales Growth

NMDC Ltd Shares Hit 52-Week High Amid Strong Production and Sales Growth

Shares of NMDC Ltd, a leading mining company in India, reached a 52-week high of ₹186 on Monday, reflecting a nearly 3% gain over the last two trading sessions. This surge is attributed to the company’s record production and sales growth.

Impressive Sales and Production Figures

NMDC’s sales in November showed a significant year-on-year increase of 25%, amounting to 3.79 million Tonnes (MT). This strong performance isn’t confined to November alone; year-to-date in FY24, NMDC’s sales have grown by 23.5% to 27.78 MT. Similarly, production volumes have also seen a healthy increase of 17.10% year-on-year, reaching 27.31 MT.

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Earnings Prospects and Steel Demand

The robust production and sales growth are bolstering the earnings prospects of NMDC. The steel demand in India remains strong, driven by the government’s focus on infrastructure. Post Q2 results, NMDC maintained its FY24 target at 47-49 MT but slightly raised its FY25E target to 51-53 MT. The latter half of the year typically sees stronger volume pickups, and heavy capital expenditure is expected to enhance NMDC’s evacuation capacity, further supporting volume growth.

Rising Iron-Ore Prices and Price Hikes by NMDC

Iron-ore prices globally have risen, with prices exceeding $130 a tonne, a significant increase from around $105 a tonne in August. NMDC has responded to these market conditions by increasing prices for its products, with Lump Ore prices rising to Rs. 5,400/- per ton and fines to Rs. 4,660/- per ton, both seeing an increase of ₹200 a tonne in October.

Analysts’ Outlook and Earnings Expectations

With improved volume growth and rising iron ore prices, NMDC’s earnings are likely to see substantial support. Analysts at Motilal Oswal Financial Services believe that NMDC is on track to exceed 50 MT of volumes in FY25. Following the Q2 results, analysts at MOFSL have already upgraded their revenue and EBITDA estimates for FY25 by 11% and 13%, respectively, considering the optimistic outlook on volumes and global iron ore prices.

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