NMDC - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 4.0
| Stock Code | NMDC | Market Cap | 71,618 Cr. | Current Price | 81.6 ₹ | High / Low | 86.8 ₹ |
| Stock P/E | 10.4 | Book Value | 36.8 ₹ | Dividend Yield | 4.04 % | ROCE | 30.3 % |
| ROE | 24.4 % | Face Value | 1.00 ₹ | DMA 50 | 79.6 ₹ | DMA 200 | 75.2 ₹ |
| Chg in FII Hold | 0.44 % | Chg in DII Hold | -0.32 % | PAT Qtr | 1,738 Cr. | PAT Prev Qtr | 1,695 Cr. |
| RSI | 52.5 | MACD | 0.32 | Volume | 3,79,29,262 | Avg Vol 1Wk | 4,19,04,611 |
| Low price | 59.5 ₹ | High price | 86.8 ₹ | PEG Ratio | -0.96 | Debt to equity | 0.11 |
| 52w Index | 80.9 % | Qtr Profit Var | -10.6 % | EPS | 7.85 ₹ | Industry PE | 19.6 |
📊 Analysis: NMDC demonstrates strong fundamentals with ROCE at 30.3% and ROE at 24.4%, supported by a low debt-to-equity ratio of 0.11. The stock trades at an attractive valuation with a P/E of 10.4 compared to the industry average of 19.6, making it undervalued. Dividend yield at 4.04% provides solid income support. Technical indicators (RSI ~52.5, MACD positive) suggest stable momentum, with price above both 50 DMA (79.6 ₹) and 200 DMA (75.2 ₹). However, the PEG ratio (-0.96) indicates weak growth prospects, and quarterly profit variation (-10.6%) raises concerns about earnings consistency. Despite this, the company’s strong fundamentals and high dividend yield make it a good candidate for long-term investment.
💰 Ideal Entry Zone: A favorable entry would be in the range of 75 ₹ – 80 ₹, closer to the 200 DMA and below current price, offering better margin of safety.
📈 Exit / Holding Strategy: If already holding, maintain a long-term horizon (3–5 years) given strong ROE/ROCE, low debt, and attractive dividend yield. Consider partial profit booking near 85–87 ₹ if valuations expand or momentum peaks. Exit strategy should be considered if earnings continue to decline or if dividend payout weakens. Long-term investors may continue holding for compounding returns and steady dividend income.
✅ Positive
- Strong ROCE (30.3%) and ROE (24.4%) indicate efficient capital use.
- Low debt-to-equity (0.11) ensures financial stability.
- Attractive valuation with P/E (10.4) well below industry average (19.6).
- Dividend yield (4.04%) provides strong income support.
- FII holding increased (+0.44%), showing foreign investor confidence.
⚠️ Limitation
- PEG ratio (-0.96) suggests weak growth prospects relative to price.
- Quarterly profit variation (-10.6%) raises earnings concerns.
- DII holding decreased (-0.32%), showing reduced domestic institutional support.
📉 Company Negative News
- Quarterly PAT declined from 1,695 Cr. to 1,738 Cr. with negative variation (-10.6%).
- DII holding decreased, reflecting weaker domestic support.
📈 Company Positive News
- Dividend yield at 4.04% is attractive compared to peers.
- FII inflows reflect confidence in long-term prospects.
- EPS at 7.85 ₹ indicates strong earnings power.
🏭 Industry
- Industry P/E at 19.6 indicates sector is moderately valued compared to NMDC’s discount.
- Mining and metals sector expected to benefit from infrastructure growth and global demand recovery.
🔎 Conclusion
NMDC is a fundamentally strong company with excellent efficiency metrics, low debt, and attractive dividend yield. Despite weak growth prospects and earnings volatility, its undervaluation and high yield make it suitable for long-term investors. Ideal entry is below current price (~75–80 ₹). Existing holders should maintain positions with a 3–5 year horizon, booking profits near highs if valuations remain excessive.