Stock Market today: Multibagger NMDC share price traded 3% lower on Tuesday on a day when the indices remained under pressure too. The correction was further prompted by company reporting lower June volumes as iron-ore prices for its produce were revised downward. These indicate near term challenges on earnings growth even though the broader trend on steel demand in the country remains positive and NMDC is expected to see good volume growth say analysts who remain watchful on near term volumes and realizations.
NMDC share price has risen more than 125% over the last one year, giving a Multibagger returns to the investors, benefitting from rising production and some improvement in realizations.
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Near term challenges
NMDC saw some decline in production and sales volumes during the month of June. NMDC reported total production of 3.37 million tonne (MT) during the month of June’2024 slightly lower than to 3.48 MT during the same month in the previous year. The total sales too decreased, from 4.10 MT to 3.73 MT year over year.
Also, NMDC has adjusted down the price it charges for iron ore. Iron ore lumps prices have been revised down by ₹500 a tonne to ₹5,950 a tonne from ₹6,450 per tonne earlier. This is a ₹500 price reduction.
Similarly, the price of iron ore fines has been cut by ₹500 to Rs5,110 per tonne compared to the earlier ₹5,610 per tonne.
The decline in iron prices comes with a decline in global prices . The global iron-ore prices that had seen a sharp spike in January to rise to more than $140 a tonne, however have corrected to lower than $110 a tonne.
The same may put pressure on the realizations and revenues. Moving forward the monsoon season in the near term may also impact production in July-September quarter.
Firm longer term prospects
However analysts maintain firm longer term outlook. The analysts at ICICI Securities said that Low per capita steel usage provides a significant room for growth for NMDC. Aggressive volume targets by NMDC to meet the growing demand of iron ore, is another positive trigger. Besides analysts also say that NMDC is diversifying its products portfolio by venturing into non iron ore mining space such as bauxite, gold, diamond, lithium, and copper, both in India and overseas.
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