NMDC Target Cut to Rs 80 by Citi Amid Cost Overruns

Citi has lowered its target price for NMDC Ltd. to Rs 80 from Rs 85, maintaining a ‘sell’ rating due to the company’s subdued performance in the first quarter of fiscal 2027.

Q1 Performance Snapshot

Despite a modest 1.9% increase in net profit and a 6% rise in iron ore sales volume, these gains were largely offset by elevated operational costs.

• Net Profit: Rs 2,006 crore
• Iron Ore Sales Volume: 117.30 lakh tonnes
• Revenue: Rs 6,795 crore (largely unchanged)
• EBITDA: Rs 2,468 crore (down 0.4%)
• EBITDA Margin: 36.3% (contracted from 36.8%)

The brokerage emphasized that the higher costs effectively overshadowed any benefits NMDC received from increased volumes and improved realizations during the quarter.

Iron Ore Outlook Softens

Citi anticipates medium-term challenges for the iron ore sector, with domestic prices expected to remain stable while global prices are projected to decline.

This outlook is further complicated by an increase in global supply and weakening demand, particularly from China.

NMDC’s Market Position

NMDC’s year-on-year iron ore dispatches grew by only 1%, suggesting the company must significantly accelerate its performance to achieve its targets for the remainder of the fiscal year.

Shares of NMDC closed 0.71% lower at Rs 84.40 on Friday. The stock has seen a 1.48% increase year-to-date and a 21.61% rise over the past 12 months.