NMDC - Result Update - ICICI Securities

NMDC reported a subdued set of Q4FY20 numbers wherein the topline, EBITDA and PAT came in below our estimate. For Q4FY20, net income from operations came in at Rs. 3187 crore (down 12.5% YoY, up 6% QoQ) lower than our estimate of Rs. 3382 crore. Iron ore sales volume came in at 8.6 MT (10.2 MT in Q4FY19, 8.4 MT in Q3FY20, our estimate: 8.6 MT). EBITDA margin was at 46.7%, lower than our estimate of 54.1% (57.4% in Q4FY19, 52.9% in Q3FY20). Hence, reported EBITDA came in at Rs. 1492 crore (down 28.7% YoY, 6.2% QoQ) lower than our estimate of Rs. 1831 crore. Reported PAT was at Rs. 351.5 crore. The company has opted to settle dispute relating to direct tax under 'Vivad Se Vishwas' scheme. Accordingly, an amount of Rs. 795 crore was paid in Q4FY20, thus reducing reported PAT. Adjusted PAT came in at Rs. 1219 crore (lower than our estimate of Rs. 1403 crore).

Valuation & Outlook

NMDC's Q4FY20 performance was below our estimate on the back of lower-than-expected sales realisations. Furthermore, on account of Covid-19, for March 2020, there was a production and sales loss of 1 MT and 0.55 MT, respectively. This resulted in estimated loss in sales revenue of Rs. 220 crore and PBT of Rs. 120 crore. Going forward, we model EBITDA margin of 45.4% in FY21E and 45.3% in FY22E (51.4% in FY20). We value the stock at 5x FY22E EV/EBITDA and arrive at a target price of Rs. 90. We maintain our HOLD recommendation on the stock.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_NMDC_Q4FY20.pdf

Shares of NMDC LTD. was last trading in BSE at Rs.85.5 as compared to the previous close of Rs. 84.9. The total number of shares traded during the day was 562841 in over 3758 trades.

The stock hit an intraday high of Rs. 87.05 and intraday low of 82.8. The net turnover during the day was Rs. 47977860.

Source : Equity Bulls

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