NMDC
Reco price: Rs 171
Target price: NA
Iron ore pricing in India is under structural shift, with pricing power favouring miners. NMDC has now shunned the export parity pricing ‘reverse-worked’ from Platts index to a more favourable domestic market demand/supply basis. The Karnataka mining ban proved a blessing in disguise, as it expedited approval for the Kumarswamy mines along with permission to mine a total of 12 mtpa in the state. The company is expected to deliver volume growth of 14 per cent over FY12-14, along with possibility of further upside on restarting of Essar slurry pipeline. Asset valuation at $7 per tonne is very attractive. The NMDC cash chest is likely to grow from Rs 20,000 crore currently to Rs 31,000 crore by the end of FY14 despite capex. The upside from current levels works out to 23 per cent.
Motilal Oswal Securities
