MOSL: NMDC (Buy)-Operational decline as expected on lower realizations, Donimalai mine lease resolution to drive re-rating
NMDC: Operational decline as expected on lower realizations; Donimalai mine lease resolution to drive re-rating; Maintain Buy
(NMDC IN, Mkt Cap USD4.5b, CMP INR103, TP INR136, 33% Upside, Buy)
4QFY19 adj. EBITDA of INR20b (-12% QoQ) came in line with our estimate of INR19.6b. EBITDA is adjusted for (a) expected credit loss of INR742m, which is non-recurring and (b) INR1.65b of provision write-backs. The QoQ drop in EBITDA was driven by lower realizations. Adj. PAT declined 10% QoQ to INR13.6b (7% beat).
- Production increased by 11% QoQ to 10.6mt, while sales were up 18% QoQ to 10.2mt, led by strong offtake from NMDC's mines in Chhattisgarh.
- Domestic reported realization decreased INR571 QoQ to INR2,827/t on the back of price cuts.
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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