MOSL: NMDC (Buy)-Miss led by lower exports-Valuations attractive
NMDC: Miss led by lower exports; Valuations attractive; Maintain Buy
(NMDC IN, Mkt Cap USD4.4b, CMP INR104, TP INR126, 21% Upside, Buy)
2QFY20 adj. EBITDA was down 39% QoQ to INR11.7b (11% below est. INR13.1b) on the back of lower export volumes at 0.52mt (v/s est. 0.7mt). The QoQ drop in EBITDA was led by lower overall volumes. PBT declined 40% QoQ to INR11.9b while Adj. PAT declined 40% QoQ to INR8.2b (14% miss).
- Production was down 41% QoQ (down 5% YoY) to 5mt, while sales declined 33% QoQ (down 13% YoY) to 5.8mt.
- Reported domestic realization declined INR25 QoQ to INR2,891/t on the back of price decline (INR200/t in Sep'19).
- For 1HFY20, adj. PAT was up 13% YoY to INR21.7b. Cash flow from operations post tax was down 53% YoY to INR5.2b on the back of WC deterioration. Capex for 1HFY20 stood at INR9.1b.
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.
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