NMDC Stock Surges on Motilal Oswal 'Buy' Call, Rs 100 Target Set

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AuthorVihaan Mehta|Published at:
NMDC Stock Surges on Motilal Oswal 'Buy' Call, Rs 100 Target Set
Overview

Motilal Oswal has issued a 'BUY' recommendation for NMDC, setting a target price of Rs 100. The brokerage's optimism is fueled by the company's robust third-quarter fiscal year 2026 financial performance, which surpassed revenue estimates due to enhanced volumes and net selling realization.

Strong Quarterly Performance Drives Bullish Outlook

Motilal Oswal's latest research report has underscored a positive outlook for NMDC, reiterating its 'BUY' rating and establishing a price target of ₹100. This conviction stems from the company's impressive third-quarter fiscal year 2026 financial results, which significantly outpaced expectations. Revenue for the quarter reached ₹76.1 billion, a notable 16% year-on-year increase and a 19% rise quarter-on-quarter. This growth was primarily propelled by improved sales volumes and better net selling realization (NSR).

Production and Sales Metrics Bolster Confidence

The iron ore producer reported iron ore production figures of 14.7 million tonnes, marking an 11% year-on-year and a substantial 44% quarter-on-quarter increase. Sales volume followed suit, climbing 6% year-on-year and 19% quarter-on-quarter to 12.7 million tonnes. Average selling price (ASP) per tonne stood at ₹5,993, reflecting a 9% year-on-year gain and a marginal 1% quarter-on-quarter uptick. These operational efficiencies translated into earnings before interest, taxes, depreciation, and amortization (EBITDA) of ₹21.4 billion, a 10% decrease year-on-year but an 8% increase quarter-on-quarter, aligning with forecasts.

Valuation and Future Prospects

At the current market price, NMDC is trading at a valuation of 5.3 times its estimated enterprise value to EBITDA (EV/EBITDA) and 1.8 times its price-to-book value (P/BV) on fiscal year 2027 estimates. Motilal Oswal's target price of ₹100 is based on a 6.5 times EV/EBITDA multiple applied to September 2027 estimates, suggesting confidence in sustained performance and potential upside. The brokerage highlighted that EBITDA per tonne was ₹1,688, slightly below their estimate of ₹1,766, but the overall strong revenue and volume performance compensated for this.

The 'BUY' recommendation reflects a belief that NMDC is well-positioned to capitalize on favorable market conditions in the iron ore sector. Investors will be closely watching the company's ability to maintain its production momentum and capitalize on its NSR, crucial factors for achieving the projected valuation targets.

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