NMDC Steel Ltd: Where ₹2,374 Cr disappears quietly, and everyone still claps.

🧨 At a Glance

Imagine if a startup raised ₹30,000 Cr, had a brand-new factory, zero customer stickiness, -10% margins, and a boardroom filled with government appointees. Now, imagine if that startup didn’t shut down but instead became a listed PSU.
Welcome to NMDC Steel Ltd, the steelmaking arm spun out from NMDC, designed for scale but currently specialising in losses.

🏗️ 1. What Even Is NMDC Steel?

• 🎓 Born: 2022, after being hived off from NMDC Ltd, India’s largest iron ore producer
• 🏢 Plant: Nagarnar Steel Plant, Chhattisgarh — ₹23,000 Cr+ setup
• 🔩 Product: Hot Rolled Coils (HRC), Low Carbon Steel, HSLA, API grade steel
• 🧾 Capacity: 3 MTPA integrated steel plant
• 🎯 USP: Widest slab caster in public sector (1650 mm) — cool trivia, doesn’t help profits

But so far, this looks like a PSU version of WeWork. Great asset, zero profit.

📉 2. FY25 Highlights (Lowlights?)

Let’s not sugarcoat it.

Burn rate: Over ₹6.5 Cr per day lost in FY25.

💣 3. Why Are They Bleeding So Bad?

Let’s break the losses down:

• 💸 Operating Expenses > Revenue – FY25 expenses: ₹10,291 Cr vs ₹8,503 Cr revenue
• 💥 High depreciation: ₹953 Cr – because, hello ₹23,000 Cr of fixed assets
• 🏦 Interest expense: ₹652 Cr – thanks to ₹5,900 Cr of debt
• 🛑 No economies of scale: Plant utilization still low
• ❄️ PSU DNA: Decision making slower than steel cooling

This isn’t steel production. This is budget execution in slow motion.

🏦 4. Balance Sheet Breakdown: Assets Solid, Income Missing

And oh — ₹3,494 Cr in contingent liabilities. Probably from EPC contractors and legacy disputes.

📊 5. Quarterly Breakdown: Progress Ya Illusion?

They’re trying. They’re ramping. But even with ₹2,800 Cr revenue — they still posted a ₹473 Cr loss.

That’s like selling 500 cakes a day and still not being able to pay your baker.

🧑‍⚖️ 6. Governance Drama

• 🧍 Independent Directors: SEBI says appoint. NMDC Steel says “soon.”
• 🧾 Secretarial Compliance Report (May 2025): Violations noted, fines imposed.
• 👨‍💼 CFO Appointed in May 2025: Interim, of course. Permanent later.

PSU tradition = governance comes after performance. And sometimes, never.

🧠 7. Is There Any Hope?

Yes, actually. IF:

• 🔋 Utilization improves: Even 80% plant utilization could turn this breakeven
• 📉 Debt refinancing: Reduce interest costs (~₹650 Cr annually!)
• 🔄 Operational leverage: Fixed costs already sunk. Margins can explode if volumes rise
• 🔗 Integration with NMDC (parent): Cheap iron ore supply can help spread costs

Basically, NMDC Steel is a Jio-style gamble by the government. Massive infra. Giant losses. Hope that scale saves it.

🧮 8. Valuation: Market Pe Deen, Book Pe Queen

• 📦 Market Cap: ₹10,987 Cr
• 📚 Book Value: ₹~35/share
• 💥 ROE: -16.6%
• 📉 1-Year Price Fall: -37%
• 📊 Promoter Holding: 60.79%
• 👨‍👩‍👧‍👦 Public Shareholders: 8 Lakh+ retail investors still holding on

🎯 Fair Value Range (Speculative)

Let’s say:

• EPS turns positive by FY27 at ₹5
• Assign P/E of 10–15 (if turnaround works)

FV = ₹50–₹75 (2–3 years out).
Today’s price = ₹37.5 → high risk, high reward, high PSU.

🧠 EduInvesting Verdict

NMDC Steel is not a value stock. It’s a state-sponsored “Build Now, Pray Later” experiment.

• If you believe in steel demand, PSU bailouts, and the India growth story — sure.
• If you want cash flow, dividends, or sanity — run.

Right now it’s a Unicorn only in asset size, and a burn machine in every other metric.

🏷️ Tags:

nmdc steel, steel psu stocks, nagarnar plant losses, PSU turnaround stories, eduinvesting stock analysis, steel ipo disaster, nmdc steel share price, loss making government companies

✍️ Written by Prashant | 📅 20 June 2025