NMDC share price rises 73% in last one year scaling 52 week highs recently. Should you Buy, Sell or Hold ?

NMDC Share price after gaining almost 73% in last one year also scaled 52 week highs on Tuesday. NMDC is seeing strong volume growth as was evident from January production numbers.

NMDC sales volume at 4.19 million tonne (mt) during December grew strong 26% year on year. The sales volume at 31.97 during first nine months of FY24 also have grown 23,9% year on year.

This is being supported by strong production growth. NMDC iron-ore production at 4.48 mt during December 2023 grew 24% y-o-y taking total production during first nine months of FY24 to 31.79mt which is an increase of 18% over last year same period.\

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The rising steel production and demand in the country remains supportive for iron-ore demand , improving volume outllok for NMDC, the country’s largest producer of iron-ore.

Notably international iron ore prices have continued to rise too. The International iron ore prices (Ex China) that were hovering around $105 a tonne in July- August last year have risen and crossed $135 a tonne now. This is prompting NMDC to raise prices of its produce too.

NMDC on Tuesday announced increases in prices of lump ore & fines by ₹200-250 a tonne. While NMDC increased prices of Lump Ore to Rs. 5,600/- per ton, price of fines were increased by ₹250 to ₹4,910 a tonne. . NMDC’s fine prices were at a sharp discount of 60% to international iron ore prices against long-term average levels of 42%, which allowed NMDC to raise prices, and more hikes in coming months cannot be ruled out said analysts. NMDC already has increased prices of lump ore & fines by ₹750 a tonne each since September. NMDC thereby is likely to report better realizations and higher volumes during the December quarter.

The rising production and prices are driving NMDC’s earnings outlook, keeping analysts also bullish.

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Analysts at Antique Stock Broking said that Iron ore volume is expected to grow on account of steady domestic steel demand. Seventy percent of NMDC’s volume is sold through long-term contracts and the company sells Highgrade ore. They favor NMDC’s strong operational capacity, net cash position and capacity expansion plans. They maintain Buy rating, factoring in higher sales volume (FY25 and FY26).

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions