Accumulate NMDC; target of Rs 86: Prabhudas Lilladher

Prabhudas Lilladher's research report on NMDC

NMDC reported a tad weaker than expected consolidated operating performance in Q2FY26 on lower realization. Volumes grew 10% YoY to 10.73mt in seasonally weak quarter while average realization declined 7.6% QoQ, due to price cuts undertaken for lump and fines during the beginning of the quarter and lower premium on a/c of product mix deterioration. Lower NSR coupled with higher purchase of finished products and elevated other expenses during monsoon led to EBITDA/t of Rs1,858 (PLe of Rs1,935). Receivables from RINL/NSL continue to remain elevated. NMDC took a price cut Oct’25 which would weigh on H2FY26 earnings though there is an expectation of better demand as steel consumption picks up post monsoon.

Outlook

At CMP, the stock is trading at 4.5x/4.2x EV of FY27/28E EBITDA. Maintain ‘Accumulate’ with a revised TP of Rs86 (earlier Rs87) valuing it at multiple of 5x EV of Sep’27E EBITDA.

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NMDC - 30102025 - prabhu