NMDC hits 52-week low on weak earnings concerns; declines 7% in three days

EBITDA margin for Q1FY23E is likely to come in at 33.3 per cent as against 40 per cent in Q4FY22, said ICICI Securities

Shares of NMDC hit a 52-week low of Rs 101.50, slipping 4 per cent on the BSE in Thursday’s intra-day trade. The stock has fallen 7 per cent in the past three trading days on concerns of weak earnings due to a decline in iron-ore prices.

In the past three months, the stock of India’s largest iron-ore miner has tanked 40 per cent as compared to a 8.8 per cent decline in the S&P BSE Sensex. It has corrected 46 per cent from its 52-week high level of Rs 186 touched on July 30, 2021.

On Tuesday, NMDC announced that it has reduced iron ore prices by Rs 500 per tonne each for both lump and fines varieties due to subdued demand from the steel industry.

For the first quarter ended June 2022 (Q1FY23), NMDC reported a 20 per cent year on year decline in sales at 7.66 million tonne (MT). However, in the month of June, the company recorded a 40 per cent decline in sales at 1.9 mt compared with 3.18 mt in the same month last fiscal.

ICICI Securities expects NMDC’s topline to come in at Rs 4,022 crore in Q1FY23, down 38 per cent YoY and 40 per cent QoQ. The company’s profit after tax likely to come at Rs 1,005, down 69 per cent YoY and 45 per cent QoQ, the brokerage said in its result preview.

“We expect earnings before interest, taxes, depreciation, and amortization (ebitda) to come in at Rs 1340 crore, down 68 per cent YoY and 50 per cent QoQ. EBITDA margin for Q1FY23E is likely to come in at 33.3 per cent as against 40 per cent in Q4FY22,” it said.

Meanwhile, NMDC will be removed from the Nifty CPSE index following its decision to hive off its steel subsidiary NMDC Steel. The proposal has received shareholder’s approval.