Earnings Outlook
Improved realisations to help NMDC post robust YoY earnings
This story was originally published at 13:20 IST on 25 October 2024
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By Narayana Krishna
HYDERABAD - Improved realisation due to higher iron ore prices compared with last year is likely to help public sector iron ore major NMDC Ltd. report robust earnings growth year-on-year for the September quarter, even as price cuts are likely to impact it sequentially, analysts said.
According to the average of estimates from nine brokerages, NMDC's Jul-Sept net profit is likely to rise 34% year-on-year to INR 13.7 billion, while its revenue is seen increasing 17% on year to INR 46.9 billion. In Jul-Sept last year, NMDC reported weak numbers due to lower pricing and a heavy monsoon. It reported a net profit of INR 10.3 billion on revenue of INR 40.1 billion.
Sequentially, NMDC is expected to report a 31?ll in its net profit, while revenue is seen falling 13% due to price cuts undertaken during the quarter. The company undertook a cumulative price cut of INR 1,000 per tonne in Jul-Sept due to weak demand, impacting realisations and profitability, analysts said. However, lower royalty costs are likely to partially offset the impact of price cuts, they added.
Analysts' estimates for the company's Jul-Sept net profit ranged from INR 10.98 billion by brokerage ICICI Securities to INR 15.02 billion by Nuvama Wealth. The estimates for revenue ranged from INR 45.28 billion by ICICI Securities to INR 48.42 billion by Motilal Oswal. The company is yet to announce the date of release for its Jul-Sept earnings.
"Successive price declines--cumulatively INR 1,000/tonne during the quarter--are likely to result in a sharp fall in profitability (quarter-on-quarter) for Jul-Sept,” ICICI Securities said in its pre-earnings note. Kotak Institutional Equities shared a similar view, anticipating NMDC's Jul-Sept realisations to increase 16% year-on-year but likely to fall 8.7% sequentially. The company sold 9.7 million tonnes of iron ore, an increase of nearly 2% on year, but a decline of 3.3% quarter-on-quarter.
Most brokerages suggested that NMDC's average realisation increased 14-16% year-on-year, but dropped 8-11% sequentially due to price cuts during the quarter. Average realisation estimates for iron ore varied between INR 4,610 per tonne and INR 5,350 per tonne.
Estimates for earnings before interest, tax, depreciation and amortisation, or EBITDA, per tonne ranged from INR 1,609 per tonne to INR 1,793 per tonne, reflecting on-year growth of 29-33%. However, sequentially, it is seen declining 25-31% due to lower realisations and increased costs. According to the average of estimates from eight brokerages, NMDC's September quarter EBITDA is pegged at INR 16.10 billion, with estimates ranging from INR 11.98 billion to INR 17.60 billion.
Among key monitorables, analysts will look for an update on the company's capacity expansion plans, demand, and pricing outlook for the current financial year. At 1204 IST, shares of NMDC traded at INR 216.67 on the National Stock Exchange, up 0.4% from the previous close.
Following are the Jul-Sept earnings estimates for the company based on reports from nine brokerage houses:
|
Broker name |
Net Sales |
Net Profit |
EBITDA |
|
-------(In INR million)------- |
|||
|
Antique Stock Broking Ltd |
46,300.00 |
14,852.00 |
17,607.00 |
|
Elara Securities (India) Pvt Ltd |
46,315.00 |
14,118.00 |
16,119.00 |
|
ICICI Securities Ltd |
45,286.00 |
10,989.00 |
11,985.00 |
|
Kotak Institutional Equities |
47,501.00 |
14,716.00 |
17,101.00 |
|
Motilal Oswal Financial Services Ltd |
48,424.00 |
13,279.00 |
16,676.00 |
|
Nuvama Wealth Management Ltd |
46,264.00 |
15,020.00 |
17,468.00 |
|
Prabhudas Lilladher Pvt Ltd |
47,500.00 |
13,100.00 |
15,700.00 |
|
Sharekhan Ltd |
47,140.00 |
13,800.00 |
---- |
|
YES Securities (India) Ltd |
47,708.00 |
13,628.00 |
16,199.00 |
|
Average |
46,937.56 |
13,722.44 |
16,106.88 |
End
US$1 = INR 84.07
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Namrata Rao
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