NMDC - Investment Analysis: Buy Signal or Bull Trap?

Last Updated Time : 20 Dec 25, 07:10 am

Investment Rating: 4.4

📊 Analysis: NMDC Ltd. demonstrates strong fundamentals with ROCE at 30.3% and ROE at 24.4%, reflecting excellent efficiency and profitability. The stock trades at a low P/E of 9.54 compared to the industry average of 20, indicating undervaluation. Dividend yield at 4.32% adds income stability. Debt-to-equity at 0.11 shows a very healthy balance sheet. Despite a quarterly profit contraction (1,969 Cr. → 1,695 Cr.), overall profit variation (+33.5%) remains supportive. Technicals (RSI 53.3, MACD positive) suggest neutral-to-positive momentum.

💰 Ideal Entry Zone: 70 ₹ – 75 ₹ (near DMA 50 & 200 support levels). This provides margin of safety for accumulation.

📈 Exit / Holding Strategy: For existing holders, maintain a long-term horizon (3–5 years) given strong ROCE, ROE, and dividend yield. Consider partial profit booking near 85–90 ₹ if valuations stretch. Long-term investors can hold until valuations approach industry PE (~20), implying upside potential toward 150 ₹+ over time.

Positive

• ✅ ROCE (30.3%) and ROE (24.4%) show excellent efficiency and profitability.
• ✅ Low P/E (9.54) compared to industry PE (20) indicates undervaluation.
• ✅ Dividend yield 4.32% provides strong income support.
• ✅ Low debt-to-equity (0.11) ensures financial stability.
• ✅ FII holdings increased (+0.83%), signaling foreign investor confidence.

Limitation

• ⚠️ Quarterly profit contraction from 1,969 Cr. to 1,695 Cr.
• ⚠️ DII holding reduced (-0.10%), showing cautious domestic sentiment.
• ⚠️ PEG ratio (-0.88) reflects weak growth visibility relative to valuation.

Back to Investment List