Recommendation from Metals & Mining Sector

This section gives a recommendation of a stock having stock price below Rs 150 with sound fundamentals and expected to give handsome returns over a one-year time horizon.[EasyDNNnews:PaidContentStart]

NMDC Ltd. : IRON BACKBONE OF INDIA’S GROWTH STORY

HERE IS WHY
✓  India’s Steel Demand Resilience
✓  Capacity Expansion to 100 MTPA
✓  Attractive Valuations with Strong Cash Flows

I ndia’s steel and mining industries are entering a multi-year growth phase, supported by infrastructure expansion, industrialisation, and the government’s ambitious targets to achieve 300 MTPA of steel capacity by FY 2031. The steel sector, which contributes nearly 2 per cent to India’s GDP, grew 8–10 per cent in FY 25 and is projected to sustain a 7–8 per cent growth in FY 26. Flagship programmes such as the National Infrastructure Pipeline, PM Gati Shakti, and the Production Linked Incentive (PLI) scheme for specialty steel are driving long-term demand. In this environment, NMDC Limited—a Navratna Public Sector Enterprise under the Ministry of Steel—has firmly positioned itself as India’s largest and most cost-efficient iron ore producer.

FY 25 marked a landmark year for NMDC, as the company achieved its highest-ever production, revenue, and profitability. Revenue from operations rose 23 per cent YoY to ₹23,668 crore, while EBITDA grew 11 per cent to ₹9,846 crore with margins of 42 per cent. Net profit surged 19 per cent YoY to ₹6,692 crore, supported by record output, efficient cost management, and steady realisations. The company remained virtually debt-free, ending FY 25 with cash and cash equivalents of ₹10,000 crore, providing ample flexibility for future expansion without leveraging.

In Q1 FY 26, NMDC continued its strong performance despite seasonal headwinds. Revenue rose 23 per cent YoY to ₹6,634 crore, and EBITDA stood at ₹2,779 crore, reflecting healthy operating margins of 42 per cent. PAT was stable at ₹1,968 crore. Operationally, the company produced 11.99 MnT of iron ore in the quarter, up 31 per cent YoY, and sold 11.52 MnT, up 14 per cent YoY—the best-ever quarterly output in its history. Cumulative H1 FY 26 production reached 22.20 MnT and sales 22.25 MnT, both higher than the corresponding period last year, highlighting strong execution and demand resilience.

Management is guiding for volumes to rise steadily to 50 MTPA in FY 26 and 55 MTPA in FY 27, aided by enhanced EC limits and infrastructure upgrades. Long-term plans include expanding production capacity to 100 MTPA by FY 30, supported by a ₹65,000–70,000 crore capex pipeline over five years. Major projects such as the 15 MTPA slurry pipeline between Bacheli and Nagarnar and doubling of the KK rail line are nearing completion, which will increase evacuation capacity from 28 MTPA to 40 MTPA and reduce Logistics costs. NMDC is also diversifying into valueadded products through pellet and steel production, as well as exploring coking coal and critical mineral assets globally.

At current levels, NMDC trades at a P/E of 10.4x compared with the industry average of 22.9x, and at an EV/EBITDA multiple of 6.22x—significantly undervalued given its strong cash flows, consistent profitability, and structural demand outlook. The company delivers superior return metrics, with ROE at 23.6 per cent, ROCE at 29.6 per cent, and a dividend yield of 4.28 per cent. Its low debt-equity ratio of 0.14x and promoter holding of 60.8 per cent (zero pledging) further strengthen investor confidence.

NMDC’s fundamentals remain robust. With steady volume growth, strong operating leverage, and long-term demand visibility, the company is well placed to benefit from India’s infrastructure and industrial expansion. Backed by attractive valuations, a solid balance sheet, and a clear roadmap to double capacity by 2030, NMDC offers both growth and stability. We recommend a BUY, viewing the stock as a long-term value opportunity in India’s metal and mining sector.

[EasyDNNnews:PaidContentEnd] [EasyDNNnews:UnPaidContentStart]

[EasyDNNnews:UnPaidContentEnd]