Business Standard

NMDC poised for gains from demand triggers, expansion


NMDC reported a strong standalone revenue at ~5,410 crore, rising 45 per cent year-onyear (Y-O-Y) and 35 per cent quarter-on-quarter (Q-o-q) in line with consensus.

Iron ore sales at about 11.4 million tonnes (MT) grew 18.9 per cent Y-O-Y (19 per cent Q-O-Q). Realisatio­n stood at ~4,679 per tonne, higher by 22 per cent Y-O-Y (12.9 per cent Q-O-Q). The operating profit at ~2,030 crore jumped 77.5 per cent Y-O-Y (70.1 per cent Q-O-Q), which was above consensus. The operating profit for the PSU undertakin­g was above consensus.

Royalty costs at ~2,320 crore rose by 24.2 per cent Y-O-Y (54 per cent Q-O-Q), due to higher ore production up by 14.6 per cent YO-Y (38 per cent Q-O-Q).

Operating profit per tonne was ~1,781, higher by 49 per cent Y-O-Y (43 per cent Q-O-Q). The reported net profit was ~1,490 crore and adjusted for extraordin­ary items of ~252 crore, it was ~1,740 crore, higher by 96 per cent Y-O-Y and 69.8 per cent sequential­ly.

Management said FY24 sales volume guidance of 47 million tonnes is achievable, provided 2.3 mtpa capacity expansion at the Kumaraswam­y mine can be completed. The company is awaiting environmen­tal clearance. The 9MFY24 sales volume grew 23.7 per cent Y-O-Y to 32 MT implying that Q4FY24 volume will be 15 MT. This is a record production for NMDC.

The January sales of 4.6 million tonnes was higher by 19 per cent Y-O-Y and 9 per cent M-OM. The blast furnace at NMDC Steel is fully operationa­l. NMDC Steel is expected to break even by Q2FY25. Legally 5-star mines may operate at 110 per cent of rated capacity, which translates to a possible volume of 55 mtpa in FY25 based on current environmen­tal clearance of 50 mtpa.

Realisatio­n will improve further in Q4FY24.

Realisatio­n in Q3 stood at ~4,679 per tonne, aided by two price hikes taken in Q3FY24.

The company has made two further price hikes in Q4FY24 of around ~650/ tonne aggregated. This would push up realisatio­n.

NMDC’S prices are at a historical­ly steep discount to global import parity ore prices.

Capex for capacity expansion can be funded through internal accruals. In 9MFY24, capex was ~1,500 crore with another ~300 crore slated in Q4FY24.

FY25 capex will get enhanced to ~2,100 crore, focused on capacity expansion (67 mtpa by FY25 and 100 mtpa by FY30).

Cash and cash equivalent at the end of FY25 is expected to be at ~12,900 crore hence capex can be funded through internal accruals. The repayment of ~2,200 crore inter-corporate loan to NMDC Steel and receipt of ~1,800 crore balance due from Karnataka SPV monitoring committee could boost cash reserves. A screening plant at Kirandul and a slurry pipeline are expected to be commission­ed by FY25.

The pellet plant at Jagdalpur is being enhanced from 2 mtpa to 6 mtpa. Doubling of the Kirandulko­thavalasa railway line and a rapid wagon loading system is targeted for completion by the FY24 end. Good operationa­l capacity, excellent net cash position, capacity expansion plans are all positives.

There could be an additional 10 per cent–15 per cent of longterm revenue from non-iron ore segments like gold, magnetite, and lithium mining prospects in Australia. Crude steel production in India was up by 13 per cent Y-OY for 9MFY24.

All steel majors in India are planning to double capacity by FY30-31 with anticipate­d demand from the government thrust in infrastruc­ture. Analysts are positive on the stock and its listed downstream subsidiary NMDC Steel.

 ?? ??

Newspapers in English

Newspapers from India