📌 At a Glance

NMDC is the OG PSU cash cow — mining iron, minting profits, and throwing 3.5%+ dividend yield like confetti. With a dirt-cheap P/E of 9, solid ROE, and net profit of ₹6,500+ Cr, it’s quietly compounding while others chase capex unicorns. But is this miner a value gem or just low-P/E bait?

1️⃣ Business Model – Dig, Ship, Repeat

NMDC (National Mineral Development Corporation) is India’s largest iron ore producer, fully owned by the Government of India, operating under the Ministry of Steel.

Its core businesses:

• Iron Ore Mining:
  Contributes ~95% of revenue. Produces ~45–50 MT/year. Supplies to domestic steel giants like SAIL, JSW, Tata Steel.
• Other Minerals:
  Diamonds (Panna mine), limestone, magnesite. Basically side gigs with minimal revenue.
• Sponge Iron & Wind Energy:
  Why? Nobody knows. But it exists.

2️⃣ Financials – PSU but Profitable AF

🧮 EPS: ₹7.44
💸 Dividend: ₹2.66/share (3.56% yield)

3️⃣ Valuation – Boring Price, Beautiful Math

• Price: ₹67.9
• P/E: 9.15 → Dirt cheap
• P/B: 2x
• Yield: 3.56%
• ROCE: 30%

🧠 Fair Value Range (EduEstimate): ₹80–100
Assumes sustainable PAT of ₹6,000–6,500 Cr and 12–15x multiple (very fair for a near-monopoly with iron ore pricing power).

This thing prints cash and pays it out — no nonsense.

4️⃣ Capex & Expansion – Doubling Down

• Target: 100 MT mining capacity in coming years
• FY25 Capex: ₹3,700 Cr
• CWIP: ₹4,700 Cr
• New Mines: Ongoing work in Chhattisgarh, Karnataka, Jharkhand

Unlike other PSUs that just hoard cash and file tenders, NMDC is actually putting money to work.

5️⃣ Risks – Commodities Never Sleep

• 📉 Iron Ore Prices: Volatile AF. One China slowdown and your topline caves.
• 💰 Receivables Rising: Debtor days at 118 → concerning trend.
• 🏗️ Steel Cycle Dependency: When steel suffers, NMDC sneezes.
• 🧾 PSU Drag: Bureaucratic delays, forced dividend payouts, and zero pricing freedom.

Still, at P/E 9, you’re not exactly paying for perfection.

6️⃣ Stock Performance – Underrated PSU King

• 3Y Return: +34%
• 5Y Return: +26% CAGR
• 1Y Return: -25% (entry point?)
• Public Holding: 12.35%
• FIIs: Increased to 11.7% (up from 6% in FY22)

Retail sleeping. FIIs accumulating. Coincidence?

7️⃣ Final Thoughts – NMDC: Miner. Dividend Machine. Low-Key Beast.

NMDC is that rare PSU that does what it says — dig ore, sell ore, pay dividend. It doesn’t try to be a tech stock, doesn’t make confusing acquisitions, and doesn’t scream for attention. It just quietly delivers ₹6,000+ Cr in annual profit.

If you’re a long-term investor who loves cash, hates hype, and can handle some China volatility, NMDC is a quiet giant.

And at this price? It’s giving value stock energy in a momentum stock world.

✍️ Written by Prashant | 📅 20 June 2025

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