NMDC Share Price: Navratna Iron Company Fixes Record Date For Rs 5.75/Share Dividend; More Steam To Buy?

CPSE steel stock, NMDC touched a new 52-week high after beating street estimates across verticles in Q3FY24. NMDC also approved the proposal to pay the first interim dividend of FY24 to a staggering Rs 5.75 per share to shareholders from its profitability. Motilal Oswal has recommended buying, however, Kotak Institutional Equities says the opposite.

Navratna stock ended at Rs 246.95 apiece, up by 4.86% on BSE with a market cap of Rs 72,371.31 crore on February 15, after hitting a new 52-week high of Rs 252.65 apiece. The stock is currently up by 138% from its 52-week low of Rs 103.75 apiece.

NMDC announced a first interim dividend of Rs 5.75 per share of the face value of Re.1/- each for the financial year 2023-24.

The said Interim Dividend shall be paid/dispatched within the prescribed timelines as per the provisions of the Companies Act, 2013 to those equity shareholders of the Company whose names appear in the Register of Members/records of Depositories as beneficial owners of the equity shares as on Tuesday, the 27th
February 2024, which is the Record Date fixed for the purpose.

The Q3FY24 earnings were robust with NMDC reporting a consolidated net profit of Rs 1,470.09 crore compared to profits of Rs 904.12 crore in Q3FY23 and Rs 1,025.07 crore in Q2FY24. Consolidated revenue was up as well to Rs 5,409.90 crore in Q3FY24 as against Rs 3,719.99 crore in Q3FY23 and Rs 4,013.98 crore in Q2FY24.

While recommending to buy, Motilal Oswal said, in line with other steel manufacturers increasing their domestic presence, SAIL has announced a planned capacity expansion, which is expected to take
its total capacity to 35mt by FY31E. Capacity expansion across the sector will provide a much-needed thrust to NMDC.

Further, Motilal's note added, that NMDC is undertaking numerous capex programs, which will eventually increase its mining capacity to 70-75mt from its current 50mt. Also, NMDC ASP has moved in tandem with international iron ore prices. The ore
prices across the globe have remained strong in 3QFY24. This, along with strong domestic demand, has led to multiple price hikes in the quarter.

Motilal Oswal has yet to set a target price on NMDC.

On the other hand, brokerage Kotak Institutional Equities said, "NMDC 3QFY24 EBITDA came higher than our estimates mainly led by higher realizations with higher volumes from Chhattisgarh. NMDC has hiked iron ore prices by 14% in the past three months and margins should further expand in 4QFY24."

Kotak's note added, "We note that current domestic fines prices are close to export parity and we do not expect further hikes. We believe the spot earnings run-rate is
at its peak and cannot be extrapolated as (1) we see a downside to international iron ore prices and (2) volume growth has peaked and we see a moderate 3.8% CAGR over FY2024-26E, similar to the past decade. SELL."

National Mineral Development Corporation (NMDC), a Navratna Public Sector Enterprise under the Ministry of Steel, Government of India is the single largest producer of iron ore in India. It owns and operates highly mechanized iron ore mines in Chhattisgarh and Karnataka and has its registered office in Hyderabad, Telangana. NMDC is considered to be one of the low-cost producers of iron ore in the world. It also operates the only mechanized diamond mine in India at Panna, Madhya Pradesh.

The Company is producing about over 40 MTPA of iron ore from its major iron producing units i.e. from Bailadila Sector in Chhattisgarh and Donimalai in Bellary-Hospet region in Karnataka. NMDC envisages to have an iron ore production capacity of 100 MNT by FY30.