Hold NMDC; target of Rs 100: ICICI Direct

ICICI Direct's research report on NMDC

NMDC’s Q2FY21 performance came in line with our estimate on all fronts. NMDC reported sales volume of 6.6 million tonnes (MT), up 14% YoY (our estimate: 6.5 MT). Total operating income for the quarter was at Rs 2230 crore, down 1% YoY (our estimate: Rs 2324 crore). EBITDA came in at Rs 1030 crore, down 3% YoY (our estimate: Rs 1055 crore) while EBITDA margin was at 46.2%, down 110 bps YoY (our estimate: 45.4%). EBITDA/tonne came in Rs 1560/tonne vs. Rs 1623/tonne. Ensuing PAT came in Rs 774 crore, up 10% YoY (our estimate of Rs 793 crore). NMDC’s board has approved buyback of 13.12 crore shares (representing 4.3% of the total number of fully paid-up equity shares in the paid-up share capital of the company) at Rs 105/share. Consequently, the total buyback size is at Rs 1378 crore.

Outlook

NMDC’s Q2FY21 performance came in line with our estimate on all fronts. NMDC reported sales volume of 6.6 million tonnes (MT), up 14% YoY (our estimate: 6.5 MT). Total operating income for the quarter was at Rs 2230 crore, down 1% YoY (our estimate: Rs 2324 crore). EBITDA came in at Rs 1030 crore, down 3% YoY (our estimate: Rs 1055 crore) while EBITDA margin was at 46.2%, down 110 bps YoY (our estimate: 45.4%). EBITDA/tonne came in Rs 1560/tonne vs. Rs 1623/tonne. Ensuing PAT came in Rs 774 crore, up 10% YoY (our estimate of Rs 793 crore). NMDC’s board has approved buyback of 13.12 crore shares (representing 4.3% of the total number of fully paid-up equity shares in the paid-up share capital of the company) at Rs 105/share. Consequently, the total buyback size is at Rs 1378 crore.

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