NMDC - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 05 Nov 25, 7:43 am

Fundamental Rating: 4.3

NMDC is a fundamentally strong PSU with excellent profitability, low valuation, and minimal debt. Its consistent dividend payout and strategic role in raw material supply make it a solid long-term hold, especially for value and income investors.

📊 Financial Overview

• Profitability: PAT at ₹1,695 Cr, down from ₹1,969 Cr QoQ; EPS at ₹8.08
• Margins: ROCE at 30.3%, ROE at 24.4% — outstanding capital efficiency
• Debt Profile: Debt-to-equity ratio of 0.11 — virtually debt-free
• Dividend Yield: 4.35% — attractive for income-focused investors

📈 Valuation Metrics

• P/E Ratio: 9.38 — significantly below industry average of 22.7
• P/B Ratio: ~2.1 — reasonable given book value ₹36.8
• PEG Ratio: -0.87 — negative due to earnings contraction
• Intrinsic Value: Estimated around ₹85–₹90 based on normalized earnings and sector multiples

🏢 Business Model & Competitive Edge

• Core Operations: NMDC is India’s largest iron ore producer, supplying raw materials to steel and infrastructure sectors
• Moat: Government backing, captive mines, and strategic importance in domestic steel production
• Growth Drivers: Steel demand, export opportunities, and expansion into pellet and slurry pipeline projects

📌 Entry Zone Recommendation

• Suggested Entry: ₹72–₹75 — near DMA200 and below intrinsic value
• Technical Indicators: RSI at 51.5 (neutral), MACD slightly positive — stable momentum

📈 Long-Term Holding Guidance

• Hold for long-term if accumulated near support; ideal for dividend and value investors
• Monitor global iron ore prices and domestic infrastructure demand

✅ Positive

• Excellent ROCE and ROE
• Low P/E and strong dividend yield
• FII holding increased by 0.83%
• Strong quarterly profit variation of 33.5%

⚠️ Limitation

• Negative PEG ratio due to earnings dip
• DII holding declined by 0.10%
• QoQ PAT decline from ₹1,969 Cr to ₹1,695 Cr

📰 Company Negative News

• Q2 FY26 PAT declined 13.9% QoQ due to lower iron ore realizations and higher input costs

🌟 Company Positive News

• Featured among top small-cap picks under ₹150 for 2025 due to strong fundamentals

  Analytics Insight

• Brokerages like Nomura and UBS flagged NMDC as a value play with upside potential

  NDTV Profit

🏭 Industry

• Metals and mining industry P/E at 22.7 — NMDC trades at a discount
• Sector driven by infrastructure growth, steel demand, and global commodity cycles

🧾 Conclusion

• NMDC is a fundamentally strong PSU with high profitability, low valuation, and consistent dividends
• Accumulate near support zones for long-term value and income; monitor commodity trends and expansion projects

Sources

Analytics Insight

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