Sunday, November 21, 2021

Buy NMDC on declines

 About NMDC

NMDC Limited, is a government owned mineral producer. It is under the administrative control of Ministry of Steel, Government of India. It is involved in the exploration of iron ore, copper, rock phosphate, limestone, dolomite, gypsum, bentonite, magnesite, diamond, tin, tungsten, graphite, etc.

It is India's largest iron ore producer and exporter, producing more than 35 million tonnes of iron ore from three mechanized mines in Chhattisgarh and Karnataka. It also operates the only mechanized diamond mine in the country at Panna in Madhya Pradesh.

Performance for last 1 year

Returns -

Technicals

Support & Resistance levels

Q2FY22 Results: NMDC reported a healthy performance in Q2FY22.

 During the quarter, NMDC reported iron ore sales volume of 9.0 million tonnes (MT), up 36% YoY but down 5% QoQ (in line with our estimate of 8.9 million tonnes). EBITDA/tonne came in at | 3488/tonne, higher than our estimate of | 3000/tonne (EBITDA/tonne of | 4421/tonne in Q1FY22)

 For the quarter, revenue from operations was at | 6794 crore, up 205% YoY & 4% QoQ, higher than our estimate of | 5944 crore. EBIDTA for the quarter was at | 3115 crore, up 202%YoY but down 25%QoQ, higher than our estimate of | 2679 crore. Ensuing PAT was at | 2341 crore, up 202% YoY but down 27% QoQ (our estimate of | 2074 crore)

Key triggers for future price performance:

NMDC is targeting commissioning of the Nagarnar steel plant during H2FY22. NMDC is targeting the subsequent demerger of steel plant also during H2FY22

 For FY22E, NMDC has given a volume guidance of 44 MT

 NMDC has chalked out a capex plan of | 3750 crore for FY22E. Of this ~| 2150 crore would be spent on the upcoming steel plant

Key Takeaways - Earnings Conference Call Nov 2021

During the quarter, NMDC reported iron ore sales volume of 9.0 million tonnes (MT), up 36% YoY but down 5% QoQ (in line with our estimate of 8.9 million tonnes). EBITDA/tonne came in at | 3488/tonne, higher than our estimate of | 3000/tonne (EBITDA/tonne of | 4421/tonne in Q1FY22)

 For the quarter, revenue from operations was at | 6794 crore, up 205% YoY & 4% QoQ, higher than our estimate of | 5944 crore. EBIDTA for the quarter was at | 3115 crore, up 202%YoY but down 25%QoQ, higher than our estimate of | 2679 crore. Ensuing PAT was at | 2341 crore, up 202% YoY but down 27% QoQ (our estimate of | 2074 crore)

 Blended realisation increased on a QoQ basis on account of better grades on a sequential basis

 NMDC is targeting commissioning of the Nagarnar steel plant during Q4FY22

 For FY22E, NMDC has given a volume guidance of 44 MT

 H1FY22 capex was to the tune of | 1000 crore of which | 600 crore was for the steel plant while balance | 400 crore was for mining. NMDC has chalked out a capex plan of | 3750 crore for FY22E

 Till date, the company has incurred a capex to the tune of ~| 19000 crore for the upcoming Nagarnar steel plant.

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