NMDC Price Targets Cut By Analysts On Lower Volume, Increased Competition

Analysts have cut the target price of iron ore miner NMDC by 10% so far this year. Similar cuts have also been made to the company's revenue and Ebitda estimates for financial year 2026.

Factors like lower volume, mineral taxes and increased competitive intensity are some of the reasons for the bias turning slightly negative.

As per Bloomberg, a year ago the consensus target price for the stock when it was trading around Rs 68 per share stood at Rs 76.7. Similarly, at the start of 2025, the consensus target price for NMDC stood at Rs 82.6 per share, while the stock traded around Rs 66.8 apiece.

Today, the consensus target price stands 10% lower at Rs 73.15 per share, and the stock currently trades at a level of Rs 64. It is also important to note that the stock is down almost 4%, just this week.

As per Kotak Securities' latest note dated March 11, the brokerage expects seaborne iron ore prices to remain subdued over 2025-27.

Kotak attributes this view to two main factors. The brokerage states that the increasing trade barriers against Chinese steel exports are expected to limit their international sales. Furthermore, an expected slowdown in China's internal economic growth may lead to reduced demand for steel in the country, thereby impacting the demand for iron ore.

Moreover, the global iron ore supply chain is also expected to see a boost, as the Simandou iron ore mine in the Republic of Guinea, a major new source of high-grade iron ore, is expected to come online.

These two factors would lead to a scenario where iron ore has surplus supply amid low demand, which would have a negative implication on iron ore prices. The brokerage expects spot iron ore prices to trade around $95, $90 and $85 per tonne in FY2026, FY27 and FY28, respectively.

On the domestic front, increased competition as well as potential mineral taxes to the Karnataka government are expected to impact NMDC's prospects.

Nuvama Research notes how competition from Odisha-based miners stands as a key risk for the company. An example of this is Lloyds Metals And Energy, whose Maharashtra mines are very close to NMDC's Chhattisgarh mines. This would imply an overlap in the radius of supply of the two players. This pressure would increase once Lloyds ramps up it production to 25 million tonnes per annum by FY26.

Further, if the Karnataka (Mineral Rights and Mineral Bearing Land) Tax Bill, 2024, comes into effect, NMDC would be impacted. The company has already made a contingent liability of Rs 13,510 crore for the payment of mineral taxes for historical volumes.

As per Kotak, the potential impact to NMDC's FY26 Ebitda if the mineral taxes are applied to only Karnataka is 16%. If the taxes are applied across all states, the negative impact would be much greater at Rs 53.6%.

The factors mentioned above have led to a cut in NMDC's earnings estimates for FY26. For example, Kotak recently lowered its FY26 and FY27 estimates by 11% and 8% respectively, while Nuvama Research lowered their FY26 Ebitda estimates by 6%.