NMDC - Fundamental Analysis: Financial Health & Valuation

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

Fundamental Rating: 4.4

📊 Financials: NMDC demonstrates strong fundamentals with ROCE at 30.3% and ROE at 24.4%, reflecting excellent efficiency. Debt-to-equity ratio is very low at 0.11, ensuring financial stability. EPS stands at ₹8.08, supported by a high dividend yield of 4.32%. Quarterly PAT declined from ₹1,969 Cr. to ₹1,695 Cr., but year-on-year profit variation shows a healthy +33.5% growth.

💹 Valuation: Current P/E of 9.54 is significantly below industry average of 20.0, suggesting undervaluation. Book value of ₹36.8 gives a P/B ratio of ~2.07. PEG ratio is negative (-0.88), indicating valuation concerns relative to growth. Intrinsic value appears higher than current price, offering margin of safety.

⚒️ Business Model: NMDC operates as India’s largest iron ore producer, with strong government backing and integrated mining operations. Its competitive advantage lies in scale, cost efficiency, and strategic importance to the steel industry.

📈 Entry Zone: Current price ₹76.3 is near resistance at ₹79. Entry zone recommended between ₹72–76 for accumulation. Long-term holding is favorable given strong fundamentals, high dividend yield, and sectoral demand.

Positive

• 📌 Strong ROCE (30.3%) and ROE (24.4%) indicate excellent efficiency
• 📌 Low debt-to-equity ratio (0.11) ensures financial stability
• 📌 High dividend yield (4.32%) provides steady income
• 📌 P/E of 9.54 well below industry average (20.0), showing undervaluation
• 📌 52-week index gain of 84.9% highlights strong momentum

Limitation

• ⚠️ Negative PEG ratio (-0.88) signals growth concerns
• ⚠️ Quarterly PAT declined from ₹1,969 Cr. to ₹1,695 Cr.
• ⚠️ Current price close to resistance (₹79.2), limiting near-term upside

Company Negative News

• 📉 Decline in quarterly PAT despite strong yearly growth
• 📉 Slight reduction in DII holding (-0.10%) reflects reduced domestic institutional interest

Company Positive News

• 📈 Increase in FII holding (+0.83%) shows foreign investor confidence
• 📈 Strong year-on-year profit growth (+33.5%)
• 📈 Consistent dividend payout supports shareholder value

Industry

• ⚒️ Iron ore and mining sector supported by steel demand and infrastructure growth
• ⚒️ Industry P/E at 20.0 suggests NMDC trades at a discount compared to peers

Conclusion

✅ NMDC is fundamentally strong with excellent efficiency, low debt, and high dividend yield. Entry around ₹72–76 offers margin of safety. Long-term holding is recommended, especially for investors seeking undervalued, dividend-paying stocks in the mining sector.

Would you like me to also prepare a peer benchmarking overlay comparing NMDC with other mining and steel companies, or a basket scan to identify compounding opportunities across commodities and infrastructure?