NMDC Shares Drop 4% Following Q1 Results: Is It Time to Buy, Sell, or Hold?

In the recent trading session, shares of state-owned NMDC experienced a decline of 4%, closing at Rs 81.20 on the BSE. This dip occurs despite the company’s reported profit after tax of Rs 2,007 crore for the first quarter of FY27, reflecting a 2% year-on-year increase from Rs 1,969 crore a year prior. Revenue from operations also exhibited a modest rise of 2%, reaching Rs 6,795 crore compared to Rs 6,634 crore in the corresponding period of the previous fiscal year. Notably, iron ore production surged by 26% year-on-year, totaling 151.17 lakh tonnes, while sales increased marginally by 2% to 117.30 lakh tonnes.

The financial performance indicators portray a company grappling with rising expenses amidst a backdrop of increased earnings. EBITDA stood at Rs 2,817 crore, translating to a margin of 41%, slightly down from 42% in the same quarter last year. Moreover, profit before tax also rose by 2%, reaching Rs 2,692 crore. Average domestic realization climbed by 4% to Rs 5,548 per tonne, contributing to a 6% increase in iron ore sales revenue, which culminated at Rs 6,508 crore. However, the significant downturn in revenue from other sales—falling 39% to Rs 287 crore—presents an area of concern.

Analysts have divergent views on NMDC’s stock trajectory. Motilal Oswal maintained a “Buy” rating with a target price of Rs 98, citing robust earnings driven by healthy average selling prices and anticipating production volumes to increase to around 60 million tonnes in FY27, aided by enhanced environmental clearance limits and a joint venture mine. Conversely, JM Financial’s “Reduce” rating with a target price of Rs 87 indicates caution, emphasizing that volume growth and effective capital expenditure execution remain critical watchpoints for the company’s future performance.

In terms of operational metrics, total income saw a 3% rise to Rs 7,142 crore, while total expenses increased by 4% to Rs 4,450 crore. Elevated costs—in particular, royalties and levies rose significantly—pose challenges to profit margins and underscore the importance of strategic cost management moving forward. As NMDC targets a production goal of 60 million tonnes for FY27 and 100 million tonnes by 2030, stakeholder focus will likely sharpen on their ability to deliver against these ambitious benchmarks amid a fluctuating market landscape.

Source: The Economic Times

(Expert Note: This report was prepared by the Wealthova team.)