December 9, 2022

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NMDC Q2 Review – Weak Results; Costs Rise: Motilal Oswal

2 min read

BQ Prime’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BQ Prime’s subscribers an opportunity to expand their understanding of companies, sectors and the economy. 

NMDC Ltd.’s net sales declined 51% YoY and 30% QoQ to Rs 33 billion in Q2 FY23 (inline). Iron ore sales fell 6% YoY (up 8% QoQ) at 8.43 million tonne. YoY decline in iron ore sales reflects demand slow down in the merchant ore market.

Ebitda shrunk 73% YoY and 55% QoQ to Rs 8.5 billion, and was significantly lower than our estimate of Rs 12 billion despite in-line revenue, indicating higher than-estimated operating costs partly offset by lower royalty and additional premium as IBM prices come at a lag.

NMDC’s Ebitda/tonne at Rs 1,009 was down 71% YoY and 59% QoQ, which reflects higher costs as both sales volume and average selling price were in line.

Adjusted profit after tax fell 62% YoY and 40% QoQ to Rs 8.9 billion, 9% miss on our estimate of Rs 9.7 billion. While Ebitda miss was at 27%, adjusted profit after tax miss was just 9% due to significantly higher-than-estimated other income (up 3.8 times YoY/up two times QoQ).

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