NMDC Q4 Review: Earnings Miss On High Costs; Better Volumes Can Drive Re-Rating:; Systematix Maintains 'Hold'

NMDC reported Q4 FY25 Ebitda of Rs 20.5 billion (-2%/-14% YoY/QoQ), 16% below our estimate due to lower realizations, higher employee benefits expenses, and selling expenses. Higher selling and other expenses can be attributed to higher pellet exports, whereas employee benefits surged during the quarter due to actuarial valuations..NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..Systematix Report.NMDC Ltd. reported flat production and sales during the year, behind its guidance of 47- 49 million tonne. As volume numbers have picked up in April, management aspires to deliver 55 mt volumes this year, aligning 100% with its EC limit. We factor in 48mt/51.8mt volume sales in FY26/FY27 (versus 50.7 mt/52.2 mt earlier) while keeping realisations at the same level as FY25. The company has commenced pellet exports, which have notably contributed to the topline in Q4. With Fe content of ~66-67%, NMDC expects to earn $30-40/t premium to global iron ore prices on its pellet export realisations. We factor in 2mt and 2.5mt pellet sales in FY26/FY27 versus management guidance of achieving 2.5-3mt pellet sales in FY26 itself. We revise our FY26/FY27 Ebitda estimates higher by 18%/24% on higher realisation assumptions and additional contribution from pellet export sales. We value NMDC at 5.7x FY27E EV/Ebitda with a revised target price of Rs 78/share, implying an upside of 9% from CMP. The company is progressing towards its 100mt capacity target with a revised estimated outlay of Rs 720 bn versus Rs 500 bn earlier. NMDC spent Rs 34 bn in capex this year and expects over Rs 100 bn in capex spending for the next two years. Maintain Hold..Risks and re-rating levers: Weak global iron ore pricing is a key risk. Demonstration of superior volume growth can drive stock rerating..Click on the attachment to read the full report:.NMDC Q4 Results: Profit Falls 22%; Dividend Declared.DISCLAIMERThis report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

NMDC Q4 Review: Earnings Miss On High Costs; Better Volumes Can Drive Re-Rating:; Systematix Maintains 'Hold'

Systematix values NMDC at 5.7x FY27E EV/Ebitda with a revised target price of Rs 78/share, implying an upside of 9% from CMP.

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