NMDC jumps 10% after Q1 result; net profit declines 55% due to lockdown

Shares of NMDC, India's largest iron ore miner, rallied as much as 10 per cent to Rs 105.60 apiece on the BSE on Friday, a day after the company reported its financial results for the quarter ended June 2020 (Q1FY21). 

NMDC's profit after tax (PAT) or net profit for the quarter under review slumped by 55 per cent to Rs 533 crore as both production and sales were impacted due to the Covid-19-induced lockdown, the state-owned miner said on Thursday.

The company had posted Rs 1,179 crore PAT in the corresponding quarter in 2019-20, it said in a release here. READ MORE

NMDC's turnover during the first quarter was Rs 1,938 crore compared to Rs 3,264 crore during the corresponding quarter last fiscal. 

"I am happy that our performance remains stable despite the challenges we are facing. I am certain we will see marked improvement in our performance in the following quarters with the conditions getting normalised," said Sumit Deb, NMDC Chairman and Managing Director. 

At 09:35 AM, the stock was trading 8.6 per cent higher at Rs 104.25 on the BSE. In comparison, the benchmark S&P BSE Sensex was trading 0.55 per cent higher at 39,328.99 levels. 

Shares of the company had hit a 52-week high of Rs 139.50 on January 23, 2020, while its all-time high level stands at Rs 572, hit on January 19, 2010. 

Earlier this month, NMDC hiked rates of iron ore by Rs 300 to Rs 2,950 a tonne. Iron ore is the key raw material used in steel making. Any change in its prices has a direct impact on the rates of steel. READ MORE

"NMDC Q1FY21 EBITDA/te surprised on the back of better cost control, despite volumes declining 29 per cent YoY to 6.28 million tonne. NMDC board has accorded in-principle approval to demerge the steel unit in a ‘time bound manner’. This can unlock significant value for the minority investors as hardly any value gets attributed to Rs 160 billion of WIP in NMDC’s balance sheet on account of the steel plant. Series of price hikes (nearly Rs 700/te post Q1FY21) rebasing expected EBITDA/te, possible resolution of Karnataka mining remain additional tailwinds," says ICICI Securities in a result review note. 

It has maintained a "BUY" rating on the stock with the target price of Rs 130.