NMDC - Volume Growth, Capacity Enhancement To Drive Next Leg Of Performance: Motilal Oswal

"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..Motilal Oswal Report.The domestic demand for iron ore is expected to move in tandem with infrastructure and construction growth. NMDC Ltd., being the largest domestic iron ore miner, is expected to produce ~45 million tonne of iron ore in FY24 (production for 11 months-FY24 has crossed 40.2 mt), surpassing production of over 40 mt for the third year in a row. It is well on track to exceed 50 mt of production in FY25E and 55mt in FY26E.NMDC has planned capex for several evacuation and capacity enhancement projects, which should improve the product mix and augment its production capacity to ~100 mt by FY29-30E. .The domestic steel sector is well placed compared to its global peers and the domestic crude steel capacity is expected to reach ~175 mt in FY24 with ~82% capacity utilisation. This would translate to ~282 mt of iron ore requirement in FY24E, with NMDC commanding a ~16% market share. Similarly, as crude steel capacity inches up to 300 mt by FY30-31, total demand for iron ore would be ~435-445 mt. We believe NMDC, with a dominant presence in the domestic market, is well placed to capitalise on the growth opportunities ahead. .In line with the recent correction in international prices, NMDC has reduced prices by Rs 200/tonne for lumps and Rs 250/t for fines. Though the price cuts will weigh on the company’s near-term growth, NMDC aims to continuously improve volumes to offset the impact. NMDC trades at 4.5 times FY26E enterprise value/Ebitda and 1.7 times FY26E price/book. We reiterate our Buy rating on the stock with a target price of Rs 260. .Key risks: ~105 iron ore blocks have been auctioned since FY16 (~57 blocks auctioned in FY23 and FY24E) of which ~30 mines are operational; when the remaining captive mines become operational, it would lead to an increase in the supply of iron ore, thus increasing the competition for NMDC; NMDC relies heavily on a few customers, which exposes the company to business risk..Click on the attachment to read the full report:.ICICI Lombard - Tech Initiatives To Drive Long-Term Efficiencies: Motilal Oswal.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 - Volume Growth, Capacity Enhancement To Drive Next Leg Of Performance: Motilal Oswal

NMDC on track to surpass 50mt of production by FY25E

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NMDC - Volume Growth, Capacity Enhancement To Drive Next Leg Of Performance: Motilal Oswal

NMDC on track to surpass 50mt of production by FY25E

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