NMDC: Transitory higher royalty rate drives EBITDA miss; Valuations compelling; Maintain Buy
(NMDC IN, Mkt Cap USD6.1b, CMP INR137, TP INR215, 55% Upside, Buy)
3QFY18 adj. EBITDA grew 4% QoQ (down 6% YoY) to INR13.3b, below our estimate of INR15.4b on marginally lower realization and higher royalty expenses which is transitory. EBITDA is adjusted for (a) rail line doubling payment of INR453m and (b) expected credit loss of INR762m, which are non-recurring. Adj. PAT grew by 2% QoQ to INR9b (est. 10.6b).
Valuations compelling; Maintain Buy
NMDC Limited is an India-based company engaged in mining of iron ore. The Company's segments include Iron Ore, and Other minerals & services. It is also engaged in the production and sale of diamond, sponge iron and wind power. Its projects under construction include Bailadila Deposit-11/B, Kumaraswamy Iron Ore Project, 1.2 million tons per annum (MTPA) Pellet Plant at Donimalai, 3.0 million tons per annum (MTPA) Integrated Steel Plant in Chhattisgarh, Panthal Magnesite Project, Screening Plant III at Kirandul Complex, Screening Plant II at Donimalai Complex, doubling of Railway Line between Kirandul and Jagdalpur, Steel Plant at Bellary and Rail Link between Dalli-Rajhara-Rowghat-Jagdalpur Railway Line Project. It proposes to diversify into other commodities, such as steel making raw materials (coking coal, manganese ore nickel); fertilizer raw materials (rock phosphate potash), and thermal coal. It also proposes to invest in raw materials, such as tungsten and rare earth minerals.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
NMDC LTD. (IN), a company active in the General Mining industry, is favoured by a more supportive environment. The independent financial analyst theScreener has confirmed the fundamental rating of the title, which shows 3 out of 4 stars, as well as its unchanged, moderately risky market behaviour. The title leverages a more favourable environment and raises its general evaluation to Slightly Positive. As of the analysis date September 21, 2018, the closing price was INR 115.75 and its potential was estimated at INR 128.12.
NMDC: Iron ore pricing improving; Highly profitable steel project, albeit delayed, is available for free(NMDC IN, Mkt Cap USD6.2b, CMP INR129, TP INR187, 46% Upside, Buy)Pricing power returning – mines take price hike in December Indian iron ore miners are gaining pricing power again, as some of the mines in Odisha are shut, international iron ore prices have moved up, and demand is increasing (as Indian steel mills are trying to boost production in a seasonally strong part of the year). We expect Indian iron ore supply to get tight over the next 2-3 years, with leases of a number of private m...
METAL: Upgrading earnings for Coal India led by big price hike; But lowering EPS estimates for aluminum smeltersCoal price hike of 8%: Coal India (COAL) has announced a price hike of INR64b for FY19E, based on its target coal production of 630mt. This translates into an average price hike of ~INR100/t, which is ~8% of average realization in FY18 for linkage supply.Steep price hikes in many grades: We note that the price hike is not uniform across grades (Exhibits 1 and 2), as COAL has tried to rationalize pricing on INR/Kcal basis (refer Column 3 & 4). Grades 11-14 have witnessed a sharper pr...
METALS WEEKLY: India steel product prices continue to riseIndian steel: Long product (TMT Mumbai) prices were up ~5% WoW. Sponge iron prices were up ~4% WoW, while domestic scrap prices were up ~7% WoW. Pellet prices were also higher. Domestic iron ore lump and fines prices were up INR300-500/t. Domestic HRC prices were up ~2% WoW, while import price offers were unchanged.Raw materials: Iron ore prices (China cfr) were up ~3% WoW. Thermal coal prices were up ~1% WoW. Coking coal prices were also higher by ~1%. China’s pellet import prices were higher by ~1%.Europe: HRC prices were unchanged. ...
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