NMDC shares have more 'sell' recommendations than 'buy' after Q4 results; Details here

Shares of NMDC Ltd. are in focus on Monday, June 1, reacting to their fourth quarter earnings, which were reported after market closing hours on Friday.

The company's topline in the fourth quarter was strong due to higher sales to its demerged entity NMDC Steel. However, the operational performance during the quarter was weak due to losses in pellet sales.

NMDC's net profit grew by 35% from last year to ₹2,020.1 crore, while revenue grew by 61% from the year-ago quarter to ₹11,173 crore. Volumes were up 21% to 15.3 MT from 12.67 MT last year.

The company's average domestic realisation stood at ₹4,759 per tonne compared to ₹5,007 per tonne in the year-ago period and ₹4,681 per tonne in the prior quarter.

Earnings before interest, tax, depreciation and amortisation (EBITDA) increased by 29% to ₹2,644 crore from ₹2,048 crore in the year-ago period. However, it was below ICICI Securities' estimate of ₹3,090 crore.

NMDC's EBITDA margins contracted to 23.7% from 29.5% in the year-ago period from 28.7% in the December quarter.

Pellet and other minerals segment reported an EBIT loss of ₹102.4 crore compared to a loss of ₹10.8 crore in the year-ago period. The same segment saw a positive EBIT of ₹177 crore in the December quarter.

Goldman Sachs Bearish

Goldman Sachs has a "sell" rating on NMDC with a price target of ₹84 apiece, indicating a downside of 5% from its previous close.

NMDC's hot rolled coil (HRC) sales (from NMDC Steel) surged during the fourth quarter, recording a revenue of ₹2,950 crore from ₹102 crore in the previous year and ₹740 crore in the prior quarter.

The brokerage added that NMDC's iron ore segment sales volume was at 15.3 MT, in-line with its estimates. However, blended realisation was 4.1% higher than its estimates.

The company's EBITDA/tonne of iron ore sales were at ₹1,728, almost in-line with Goldman Sachs' estimate of ₹1,732.

Receivables surged 18.8% from last year ₹9,210 crore mainly due to a build up from NMDC Steel and Rashtriya Ispat Nigam Ltd. (RINL), the brokerage added.

Of the 23 analysts who have coverage on the NMDC, nine have a "buy" rating, four have a "hold" rating while 10 have a "sell" rating.

NMDC shares ended the previous session 4.2% down at ₹88.4 apiece. The stock has gained 5.7% this year, so far.

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