NMDC gets 'Buy' call from Nuvama despite Q4 EBITDA miss; here's why
Despite the Q4 miss and short-term headwinds, Nuvama has maintained its FY26E and FY27E EBITDA estimates.
- May 28, 2025,
- Updated May 28, 2025 5:58 PM IST
State-run NMDC Ltd reported a slightly weaker-than-expected performance for the fourth quarter of financial year 2024-25 (Q4 FY25), said Nuvama Institutional Equities. The company posted EBITDA (Earnings before interest, taxes, depreciation and amortisation) of Rs 2,050 crore, below Nuvama's estimate of Rs 2,150 crore and down 4 per cent year-on-year (YoY).
EBITDA per tonne stood at Rs 1,617, reflecting a YoY decline of Rs 87/t. Blended iron ore realisations softened 2 per cent YoY to Rs 5,007/t, driven by a 12 per cent YoY increase in cost per tonne. A key concern was the sharp sequential increase in receivables, which rose by Rs 1,100 crore to Rs 7,800 crore in Q4, leading to cash depletion.
"Rising receivables are eating into NMDC's cash reserves," Nuvama noted, highlighting that net cash declined to Rs 6,260 crore at FY25-end from Rs 8,910 crore at the end of FY24. However, the brokerage expects receivables to decline in the coming quarters, easing the pressure on cash flows.
Looking ahead, Nuvama projects stronger numbers for Q1 FY26, with EBITDA per tonne expected in the Rs 2,000–2,050 range. This outlook is backed by a Rs 440/t price hike implemented in May and anticipated YoY volume growth of over 10 per cent. However, the broking firm also cautioned about a potential marginal price correction in June.
Despite the Q4 miss and short-term headwinds, Nuvama has maintained its FY26E and FY27E EBITDA estimates. Valuing the stock at 9x FY27E EPS, it has retained a 'BUY' rating with a target price of Rs 85.
NMDC is currently undertaking a capital expenditure of Rs 40,000 crore, with the majority of the funding expected to come from internal accruals, Nuvama further stated.
Meanwhile, NMDC shares settled 2.63 per cent lower at Rs 70.85 on Wednesday. At this closing price, the counter has shed 2.24 per cent on a year-to-date (YTD) basis.
State-run NMDC Ltd reported a slightly weaker-than-expected performance for the fourth quarter of financial year 2024-25 (Q4 FY25), said Nuvama Institutional Equities. The company posted EBITDA (Earnings before interest, taxes, depreciation and amortisation) of Rs 2,050 crore, below Nuvama's estimate of Rs 2,150 crore and down 4 per cent year-on-year (YoY).
EBITDA per tonne stood at Rs 1,617, reflecting a YoY decline of Rs 87/t. Blended iron ore realisations softened 2 per cent YoY to Rs 5,007/t, driven by a 12 per cent YoY increase in cost per tonne. A key concern was the sharp sequential increase in receivables, which rose by Rs 1,100 crore to Rs 7,800 crore in Q4, leading to cash depletion.
"Rising receivables are eating into NMDC's cash reserves," Nuvama noted, highlighting that net cash declined to Rs 6,260 crore at FY25-end from Rs 8,910 crore at the end of FY24. However, the brokerage expects receivables to decline in the coming quarters, easing the pressure on cash flows.
Looking ahead, Nuvama projects stronger numbers for Q1 FY26, with EBITDA per tonne expected in the Rs 2,000–2,050 range. This outlook is backed by a Rs 440/t price hike implemented in May and anticipated YoY volume growth of over 10 per cent. However, the broking firm also cautioned about a potential marginal price correction in June.
Despite the Q4 miss and short-term headwinds, Nuvama has maintained its FY26E and FY27E EBITDA estimates. Valuing the stock at 9x FY27E EPS, it has retained a 'BUY' rating with a target price of Rs 85.
NMDC is currently undertaking a capital expenditure of Rs 40,000 crore, with the majority of the funding expected to come from internal accruals, Nuvama further stated.
Meanwhile, NMDC shares settled 2.63 per cent lower at Rs 70.85 on Wednesday. At this closing price, the counter has shed 2.24 per cent on a year-to-date (YTD) basis.