Buy This Large Cap Stock With Upside Potential Up To 25%: ICICI Securities

NMDC: Q2FY22 Results

In Q2FY22, NMDC reported a strong performance.

• NMDC reported iron ore sales volume of 9.0 million tonnes (MT) in the third quarter, up 36% year over year but down 5% quarter over quarter (in line with our expectation of 8.9 million tonnes). EBITDA/tonne was Rs 3488/tonne, exceeding our forecast of Rs 3000/tonne Rs 4421/tonne in Q1FY22).
• Revenue from operations for the quarter was Rs 6794 crore, up 205 percent year over year and 4 percent quarter over quarter, exceeding our forecast of Rs 5944 crore. EBIDTA for the quarter was Rs 3115 crore, up 202 percent year over year but down 25 percent quarter over quarter, exceeding our forecast of Rs 2679 crore.

NMDC: Target and Valuation

“NMDC’s share price has given a return of ~54% over the last 12 months (from ~| 91 in November 2020 to ~| 140 in November 2021). We maintain our BUY rating on the stock Target Price and Valuation: We value NMDC at Rs 175, based on SoTP valuation,” the brokerage has said.

Key triggers for future price-performance:

The Nagarnar steel factory is expected to be operational in Q4FY22, according to NMDC. NMDC has provided volume guidance of 44 MT for FY22E. NMDC has set a capex budget of Rs 3750 crore for FY22E.

Alternate Stock Idea

The brokerage also favours Hindalco in their metal sector coverage. Hindalco is the world’s largest aluminium corporation in terms of sales, as well as a major copper player. BUY with a Rs600 target price

Disclaimer

The above stock has been picked from the brokerage report of ICICI Direct. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.