CGS CIMB has reduce on NMDC, target price Rs 72

CGS CIMB has resumed coverage on NMDC with a reduce rating in the long term and set target price of Rs 72. Shares of NMDC declined 0.29% to ?86 on Monday, while the BSE sensex closed 261.68 points down at 37,123.31.

Company Financials

For the quarter ended 30-06-2019, the company has reported consolidated sales of Rs 3263.74 crore, down -10.42 % from last quarter sales of Rs 3643.32 crore and up 34.75 % from last year same quarter sales of Rs 2421.99 crore. The company has reported net profit after tax of Rs 1178.01 crore in the latest quarter.


Investment Rationale

Dividend yield is a better metric to assess NMDC’s valuation versus conventional valuation metrics like EV/ EBITDA and P/E, however despite an optically attractive dividend yield, the brokerage believe there is significant possibility of capital loss. The upside/downside scenarios yield valuation per share of Rs 150/45 and steel plant divestment is an upside risk, according to the brokerage.