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Informist, Thursday, Feb. 6, 2025

 

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--NMDC Oct-Dec net profit INR 19.44 bln vs INR 14.92 bln year ago
--Analysts saw NMDC Oct-Dec net profit INR 20.34 bln
--NMDC Oct-Dec revenue INR 65.31 bln vs INR 54.10 bln year ago
--NMDC Apr-Dec net profit INR 51.96 bln vs INR 41.70 bln year ago
--NMDC Apr-Dec revenue INR 167.15 bln vs INR 148.19 bln year ago
 

 

By Narayana Krishna

 

HYDERABAD – Public-sector iron ore major NMDC Ltd. Thursday reported a 30.2% on-year rise in net profit for the December quarter to INR 19.44 billion, led by price hikes and improved realisation. The net profit growth is higher than that recorded in the previous two quarters. However, the net profit was below analysts' estimate of INR 20.34 billion.

 

The mining major's revenue for the quarter was up 20.7% on year to INR 65.31 billion. Revenue growth was higher than in the previous three quarters.

 

NMDC sold 11.90 million tonnes of iron ore during the December quarter, up nearly 5% on year, while the prices were increased by INR 1,000 per tonne on average, helping the company to post decent growth numbers. Sequentially, the company's net profit rose 53.2% and revenue rose 35.9%. The company has scheduled an analyst call Monday to detail its Oct-Dec performance.

 

NMDC's average realisation for the quarter was INR 5,361 per tonne, aided by the price increase, a senior official of the company told Informist. Analysts had projected average realisation in the range of INR 5,120.00-INR 5,422.00 per tonne. The earnings before interest, tax, depreciation, and amortisation for the quarter was INR 23.80 billion. The average of estimates for EBITDA was INR 25.02 billion.

 

While the price increase and volume growth boosted the company's performance in the reporting quarter, a rise in expenditure, mainly because of a spike in royalty costs, affected the net profit on year and caused it to miss the estimates of analysts.

 

The company reported a 22.3% rise on year in total expenditure for the December quarter to INR 42.75 billion. Royalty and other levies rose 30.6% on year to INR 30.32 billion. Sales and freight expenses also rose by 17.5% on year to INR 1.02 billion, and other expenses rose 18.7% on year to INR 6.24 billion.
 

KARNATAKA ACT

NMDC said that if the Karnataka (Mineral Rights and Mineral Bearing Land) Tax Bill, 2024, proposed in December, is passed, it may result in a contingent liability of over INR 135 billion for the company, but it has enough legal cover to pass the cost on to customers.

 

"If enacted in its current form, the company may be liable to pay taxes retrospectively as per the specified rates in the bill," NMDC said in an exchange filing. "Considering its current status, the estimated amount of Rs. 13,510.90 crore (INR 135.11 billion) has been considered as a contingent liability." The governor's request for clarifications on the bill and the state government's continuing discussions with stakeholders suggest that the bill may see changes before it is enacted, the company added.

 

"As per the terms of long-term agreements and auction notices, any statutory duties, levies, or taxes introduced in the future are recoverable from customers/bidders," the company further said. "Once the bill is finalized, the company will evaluate all available legal recourses for recovering these charges from customers." Market participants are keenly observing the impact of the proposed law on the company's financials.

 

At 1425 IST, shares of NMDC were trading slightly lower at INR 65 on the National Stock Exchange.  End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Rajeev Pai

 

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