NMDC's earnings growth in FY27 hinges on hitting volume target

Strong iron ore volumes and higher prices lifted NMDC's earnings, while expansion plans and coal mining projects underpin its FY27 growth outlook

NMDC reported consolidated revenue of ₹11,300 crore, including third-party value-added sales of ₹3,000 crore in Q4FY26 for NMDC Steel. This was via a temporary one-off hot-rolled (HR) coil trading arrangement to support working capital requirements at NMDC Steel.

 

Revenue (excluding third-party sales) was ₹8,400 crore, up 20 per cent Y-o-Y and 22 per cent Q-o-Q, with better volumes. Iron ore production was 16.3 million tonnes (mt), up 22 per cent Y-o-Y and 11 per cent Q-o-Q, with sales of 15.3 mt, up 21 per cent Y-o-Y as well as Q-o-Q. The blended average selling price (ASP) was ₹5,488 per tonne (flat Y-o-Y), while iron ore ASP was ₹4,873 per tonne, down 3 per cent Y-o-Y and up 3 per cent Q-o-Q.

 

Consolidated operating profit was ₹2,530 crore, up 24 per cent Y-o-Y and 25 per cent Q-o-Q, with earnings before interest, taxes, depreciation and amortisation (Ebitda) per tonne at ₹1,656, up 2 per cent Y-o-Y and 4 per cent Q-o-Q. Adjusted net profit was ₹1,950 crore, up 32 per cent Y-o-Y and 19 per cent Q-o-Q. Key receivables increased by ₹430 crore Q-o-Q to ₹9,430 crore. NMDC took price hikes of ₹500-600 per tonne in Q1FY27 to align with higher international and domestic prices.

 

In FY26, revenue was ₹28,400 crore, up 9 per cent Y-o-Y, with Ebitda up 11 per cent Y-o-Y to ₹9,030 crore, while adjusted net profit rose 10 per cent Y-o-Y to ₹7,220 crore. Annual production volume was 53.2 mt (up 21 per cent Y-o-Y), and sales volume rose 13 per cent Y-o-Y to 50 mt in FY26, at a blended ASP of ₹5,657 per tonne (up 5 per cent Y-o-Y).

 

Management expects ore prices to be range-bound in the near term without significant volatility in Q1FY27. Guidance is for 60 mt production in FY27, including standalone production of 58.5 mt, with the balance from mines under the NMDC-CMDC joint venture. Mining costs have reduced at Bacheli from ₹1,000 per tonne in FY25 to ₹810 per tonne in FY26, and further cost improvements in FY27 will help sustain ore Ebitda margins at 42-43 per cent.

 

Capex was ₹3,300 crore in FY26 and planned capex for FY27 is ₹6,000 crore, with annual capex of ₹7,000-10,000 crore through FY28-30. Project awards worth ₹15,000 crore-20,000 crore are expected to support the capacity expansion target of 100 mt by FY30. Guidance for the 100 mt target was reiterated.

 

Apart from iron ore production expansion, the company is moving into coking and non-coking coal mines and exploring other critical minerals and rare earth elements. NMDC expects coal extraction to begin at the Tokisud thermal coal block in Jharkhand from Q2FY27, with FY27 production guided at 0.75-1 million tonnes. The Rohne coking coal block in Jharkhand is targeted for commissioning by the end of Q3FY27, subject to regulatory approvals, but production is not likely until FY28. Management hopes coal will contribute ₹5,000-8,000 crore of revenue over FY27-29 in a back-ended fashion.

 

While ore volumes were strong, Ebitda margin was lower at 23.7 per cent in Q4FY26 from 29.5 per cent in Q4FY25 and 28.7 per cent in Q3FY26. The HR coil trading arrangement to offset working capital costs in NMDC Steel (which also reduced margins) was temporary.

 

High receivables are a concern, but the balance sheet is strong with a healthy net cash position. Dues from RINL stood at ₹4,590 crore and management is confident of full recovery. It is also confident of recovering receivables from NMDC Steel within two years as operations scale up at the steel subsidiary. NMDC Steel reported Ebitda of ₹1,520 crore in FY26. Financing the capex will not be difficult. The net cash balance stood at ₹4,920 crore at the end of FY26, and ongoing capex can be funded through internal accruals.

 

If the FY27 volume target of 60 mt is met, and realisations remain steady, there should be significant earnings growth. Ore realisation of ₹4,873 per tonne in Q4FY26 was 2.8 per cent lower Y-o-Y but 2.8 per cent higher Q-o-Q, with prices hiked by ₹100 per tonne in February 2026 and ₹50 per tonne in March 2026. Further hikes in Q1FY27 indicate a possible upcycle.

 

Monitorables include the scheduled ramp-up in production from new mines, and the commissioning of slurry pipelines and logistics infrastructure, which would reduce costs and scale up volumes. Above all, the supply and pricing of alternative ore sources, including both domestic and imported supplies, are crucial since NMDC's pricing must remain competitive.