Dysfunctional Donimalai mine to weigh on NMDC's near-term prospects

Cheap valuation, high dividend yield only comforting factors for stock

Shares of India’s largest iron ore mining company NMDC have corrected 12 per cent since their highs earlier this month. While September quarter (Q2) volumes were impacted by the monsoon, the firm’s key Donimalai mine is yet to restart operations. 

The quarter, therefore, saw sales volumes fall 33 per cent sequentially and 13 per cent year-on-year (YoY) to 5.8 million tonnes (mt). Falling realisations also did not bode well. 

Led by price cuts, domestic realisations fell short of estimates by Rs 25 a tonne at Rs 2,891, according to analysts’ calculations. Consequently, operating profit declined 15.7 per cent YoY in Q2. The