Better demand to aid NMDC’s fortunes

livemint.com:

₹5,200 and ₹4,460 per tonne, respectively. This is being driven by firm domestic demand for steel as iron ore is a key input used in producing steel. Moreover, it helps that the global iron ore prices are on a strong footing.

For perspective, the price of China iron ore fines were up by 11% month-on-month in September to $121 per tonne, according to SteelMint. But the trajectory going ahead depends on how the Chinese economy recovers and if that fuels the demand for steel as the country is an important market for metals. “We expect NMDC’s iron ore prices to remain stable hereon.

The downside risk to the prices appears slim given a likely demand boost in domestic markets post the monsoon season," said Tushar Chaudhari, an analyst at Prabhudas Lilladher. On the volume front, NMDC is on track to meet its FY24 target of 47-49 million tonnes. In the first half of FY24, it clocked sales volume of 20.5 million tonnes, up by 25.5% year-on-year.

In this backdrop, Nuvama Research has raised its estimate for NMDC’s dividend per share to ₹15 for FY24 from ₹7. The brokerage believes this is quite possible in a pre-election year as NMDC is likely to generate an estimated free cash flow of ₹8,500 crore and ₹5,000 crore in FY24 and FY25, respectively. To be sure, consistent volume growth is crucial to aid the NMDC stock."Exciting news! Mint is now on WhatsApp Channels