NMDC reports iron ore production at 35.5mn tonnes for FY18

16th April 2018

NMDC has reported 35.5mn tonnes of iron ore production in FY18 with iron ore sales touching 36mn tonnes. This represents a 4.4% increase yoy in production and a 1.3% increase yoy in sales of iron ore for FY18. This increase in volumes was supported by domestic crude steel production rising by 4.5% yoy in 11MFY18. NMDC has also taken a price hike, which is ~15% higher yoy for lump ore and 31% higher yoy for fines.

From these data points, it is likely that NMDC would report strong revenue and profit growth for Q4FY18. However, weakness in international iron ore prices remains a concern as it limits the prospect for future price hikes in the near term. However, domestic steel production is likely to grow by 5.7% in CY18E and this would support volume growth in iron ore sales for the company over the next two quarters.

NMDC, an iron ore mining company, would see revenue CAGR of 9.2% over FY18-20E aided by (a) 5% CAGR in iron ore shipments supported by a rise in domestic steel production. EBITDA margin is expected to expand by 270bps due to higher shipments and firm realizations.

NMDC has an iron ore mining capacity of 48mtpa. The iron ore mining operations are based out of Kirandul and Bacheli in Chhattisgarh and Donimalai in Karnataka. The company has stated a medium-term plan to expand its iron ore mining capacity to 67mtpa by FY22. NMDC also has international mining interests in Tanzania and Australia. However, both of these initiatives are still in the exploration phase. The company also has an under-construction 3mtpa steel plant in Chhattisgarh, which it plans to sell.

Source: INDIA INFOLINE