NLCINDIA - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 20 Dec 25, 11:16 pm

Fundamental Rating: 3.8

📊 Financials: NLC India shows moderate fundamentals with ROCE at 9.02% and ROE at 5.61%, reflecting average efficiency. Debt-to-equity ratio of 0.47 indicates manageable leverage. EPS stands at ₹13.8, supported by a dividend yield of 1.24%. Quarterly PAT improved from ₹368 Cr. to ₹485 Cr., showing strong 43% growth.

💹 Valuation: Current P/E of 17.2 is below industry average of 26.7, suggesting undervaluation. Book value of ₹131 gives a P/B ratio of ~1.82. PEG ratio of 55.6 indicates valuation concerns relative to growth. Intrinsic value appears slightly higher than current price, offering a limited margin of safety.

⚡ Business Model: NLC India operates in lignite mining and power generation, with diversification into renewable energy. Its competitive advantage lies in integrated mining-to-power operations and government backing, though profitability depends on fuel costs and regulatory environment.

📈 Entry Zone: Current price ₹239 is near support at ₹186. Entry zone recommended between ₹220–240 for accumulation. Long-term holding is suitable for investors seeking exposure to power and mining, though efficiency metrics remain modest.

Positive

• 📌 Strong quarterly profit growth (+43%)
• 📌 P/E of 17.2 below industry average (26.7), indicating undervaluation
• 📌 Manageable debt-to-equity ratio (0.47)
• 📌 52-week index gain of 49.8% shows strong sectoral momentum

Limitation

• ⚠️ Low ROCE (9.02%) and ROE (5.61%) reflect limited efficiency
• ⚠️ High PEG ratio (55.6) signals valuation concerns
• ⚠️ Current price below DMA 50 (249 ₹) and DMA 200 (245 ₹), showing weak technical trend
• ⚠️ RSI at 40 indicates neutral momentum, lacking strong buying signals

Company Negative News

• 📉 Decline in DII holding (-0.39%) reflects reduced domestic institutional interest
• 📉 Efficiency metrics remain below industry benchmarks

Company Positive News

• 📈 Quarterly PAT surged from ₹368 Cr. to ₹485 Cr.
• 📈 Increase in FII holding (+0.30%) shows foreign investor confidence
• 📈 Diversification into renewable energy projects supports long-term growth

Industry

• ⚡ Power and mining sector supported by government initiatives and energy demand
• ⚡ Industry P/E at 26.7 suggests NLC India trades at discount compared to peers

Conclusion

✅ NLC India offers undervaluation relative to peers, strong quarterly profit growth, and manageable leverage. Entry around ₹220–240 is reasonable for accumulation. Long-term holding is suitable for investors seeking exposure to power and mining, though efficiency metrics and valuation concerns warrant cautious allocation.

Would you like me to extend this into a peer benchmarking overlay comparing NLC India with other power and mining companies, or a sector rotation basket scan to identify compounding opportunities across energy and infrastructure?