1. At a Glance
India’s largest iron ore producer has done it again — NMDC churned out ₹6,739 crore in sales and ₹1,968 crore in net profit in Q1 FY26. Margins? A muscular 37%, because when you dig up high-grade iron ore, the earth itself is your margin. Dividend yield stands at a juicy 4.55%, P/E under 10, and ROE north of 23% — basically a value investor’s cheat code… if you ignore the ₹21,200 crore in contingent liabilities and the fact that customers are taking 118 days to pay up.
2. Introduction
Born in 1958 and still digging, NMDC is the Ministry of Steel’s crown jewel in mining. While some companies spend billions on R&D to make products people don’t need, NMDC just sells what the earth has already made over millions of years — high-grade iron ore, diamonds, pellets, even a bit of wind power to look ESG-friendly.
In a market where commodity prices swing harder than a cricket bat in a T20, NMDC’s low-cost production keeps it profitable even when iron ore prices get the sniffles. But it’s not all shiny ores — the mining sector is cyclical, capex-heavy, and vulnerable to government royalty whims. Still, with a government ownership of ~61% and record domestic steel demand, NMDC isn’t going out of fashion anytime soon.
3. Business Model (WTF Do They Even Do?)
- Core Business:Iron ore mining — primary feedstock for steel plants across India.
- Products:Lumps, fines, pellets; Fe content up to 64%.
- Side Hustles:Diamonds (Panna mines), sponge iron, wind power.
- Revenue Mix:Dominated by iron ore sales (~90%+).
- Customer Base:Steel Authority of India (SAIL) & other steelmakers.
- Pricing:
- Market-linked but cushioned by low cost of production — one of the lowest globally.
4. Financials Overview
Quarterly Snapshot – Consolidated (₹ Cr):
| Metric | Q1 FY26 | Q1 FY25 | Q4 FY25 | YoY % | QoQ % |
|---|---|---|---|---|---|
| Revenue | 6,739 | 5,414 | 7,005 | 24.5% | -3.8% |
| EBITDA | 2,478 | 2,340 | 2,051 | 5.9% | 20.8% |
| PAT | 1,968 | 1,969 | 1,477 | -0.1% | 33.2% |
| EPS (₹) | 2.24 | 2.24 | 1.68 | 0.0% | 33.3% |
| EPS (Annual) | 8.96 | — | — | — | — |
Commentary:YoY flat PAT despite higher revenue — other income fell and costs nudged up. Still, sub-10× earnings for a 30%+ ROCE business is like finding an unguarded gold mine.
5. Valuation (Fair Value RANGE only)
Method 1: P/E Method
- Annualised EPS = ₹2.24 × 4 = ₹8.96
- Sector P/E range: 8–12 (cyclical mining)
- FV Range = ₹72 – ₹108
Method 2: EV/EBITDA
- EBITDA (TTM) = ₹8,287 crore
- Net Debt ≈ -ve (cash surplus > debt historically small)
- EV/EBITDA fair multiple = 4–5× → FV Range ≈ ₹72 – ₹90
Method 3: DCF (Simplified)
- Assume ₹6,000 crore FCF, 10% discount, 0% growth → ₹70 – ₹85
Educational Disclaimer:This FV range is for educational purposes only and isnotinvestment
