Sunday, December 20, 2015

NMDC - value buy?

The company was established in the year 1958.

Financials
The average ROCE of the company over the last ten years is 40.79% but is lower at 31.98% in the last three years. The company has net current assets to the tune of INR 21,000 Crore. The company has projects worth INR 7800 Crore in progress (CWIP - Capital Work In Progress). The operating cash flow of the company last year was around INR 4000 Crore. The company has always remained profitable in the last 15 years and paid dividends regularly.

Shareholding
The Indian government owns 80% of the company.

Valuations
At the current market price of INR 90.3, the market cap of the company is INR 35,800 Crore. The stock price has touched the low it saw in May 2007. So this is eight and a half year low price for its share. The price earnings ratio is less than 8 and dividend yield is 9% (I doubt it would sustain though). The share price had touched an all time high of INR 550+ in May 2007 as well as Feb 2010. I think the company is not very expensive at the current valuations.
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1 comment:

Karthikraja K said...

NMDC is value Buy with Trap of " Govt Holding & divestment overhang".
Otherwise it is a good buy. Because its Reserves and Business is priced at roughly Rs 24 based on its book value Rs 76.
So it is very much great buy at this price....no risks involved.....
India is capable of consuming more Iron in next 20 years....Reason: More airports, Railways, Solar power plants, Port mordenisation, Industry uptick.....

Cement is valued very good whereas Iron ore not? why it is because of Raw material. Then, NMDc also vertically integerating into Steel plant...it can have better pricing than its peers....
can take exposure.
PS: holding from 250 odd levels...

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