1. At a Glance
NMDC Steel Ltd., a public sector steel producer born from NMDC’s Nagarnar project, just posted itsfirst quarterly profitof ₹26 Cr in Q1 FY26 on revenue of ₹3,365 Cr — a 66% YoY jump. Operating margin at 12% is a massive improvement from last year’s negative margins. But ROE is still deep in negative (-16.6% TTM), and the company is nursing large accumulated losses.
2. Introduction
Spun off from NMDC, NMDC Steel’s Nagarnar plant is one of the largest integrated steel facilities in the public sector. It produces low carbon steel, HSLA, Dual Phase steel, and API grade steel — the kind used in pipelines and infrastructure. The plant boasts thewidest thin slab caster in the public sector(1650 mm).
After years of bleeding money due to commissioning delays, cost overruns, and PSU-grade inefficiency, the company is finally showing signs of operational turnaround. But the market cap of ₹12,583 Cr on still-loss-making full-year numbers means investors are betting on a sustained recovery.
3. Business Model
- Core:Manufacture & sale of hot rolled (HR) steel products.
- Product Range:Low carbon steel, HSLA, Dual Phase steel, API quality steel.
- Customers:Infrastructure, oil & gas pipeline projects, automotive & construction sectors.
- Capacity:3 MTPA Nagarnar plant with integrated steelmaking (blast furnace + thin slab caster).
Revenue depends heavily on capacity utilisation, steel prices, and
ability to control production costs — all three have been volatile since commissioning.
4. Financials Overview
| Metric | Q1 FY26 | Q1 FY25 | Q4 FY25 | YoY % | QoQ % |
|---|---|---|---|---|---|
| Revenue (₹ Cr) | 3,365 | 2,023 | 2,838 | 66.4% | 18.6% |
| EBITDA (₹ Cr) | 408 | -401 | -291 | NA | NA |
| PAT (₹ Cr) | 26 | -547 | -473 | NA | NA |
| OPM % | 12.1% | -19.8% | -10.3% | NA | NA |
The YoY swing from -₹547 Cr loss to ₹26 Cr profit is the headline, but one quarter doesn’t make a trend.
5. Valuation (Fair Value Range)
- No meaningful P/E yet due to loss-making trailing 12 months.
- EV/EBITDA (annualising Q1): EBITDA ~₹1,632 Cr, EV ~₹18,500 Cr → ~11.3x — reasonable if profits sustain, expensive if this quarter is a one-off.
- DCF: Highly unreliable given volatile cash flows; would require assuming sustained 10–12% OPM and 80–90% utilisation.
Educational fair range:₹30–₹45. CMP ₹43 is at upper bound, implying market is already pricing in a steady
