MOSL: NMDC (Buy)-Lower volumes drive EBITDA decline; Valuations compelling
NMDC: Lower volumes drive EBITDA decline; Valuations compelling; Maintain Buy
(NMDC IN, Mkt Cap USD5.2b, CMP INR113, TP INR178, 57% Upside, Buy)
NMDC's 1QFY19 adj. EBITDA declined 29% QoQ (-9% YoY) to INR14.8b (est. of INR13.5b) due to 35% QoQ/26% YoY decline in volumes to 6.8mt. EBITDA is adjusted for (a) rail line doubling payment of INR291m and (b) expected credit loss of INR258m, which are non-recurring. Adj. PAT declined 30% QoQ to INR9.7b (est. of INR8.3b).
- Production was down 39% QoQ/19% YoY to 6.9mt due to low dispatches.
- Domestic realization was down 3% QoQ (+21% YoY) to INR3,541/t (6% beat).
- EBITDA per ton increased 9% QoQ to INR2,162 (USD32) due to a higher cost base in the previous quarter.
- Decline in sales volumes was driven by lower dispatches from Karnataka. Dispatches increased 2% YoY to ~6mt from Chhattisgarh, but declined ~74% YoY to 0.9mt from Karnataka on account of uncompetitive regional pricing.
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.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.