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NMDC: Volume in line; realisations surprise positively…

What’s Buzzing:

NMDC, India’s largest merchant iron ore miner, reported a healthy performance for Q2FY22, wherein topline, EBITDA and PAT came in higher than our estimate. Better than expected realisation, aided NMDC to report healthy performance for Q2FY22. 

Context:

During the quarter, NMDC reported iron ore sales volume of 9.0 million tonnes (MT), up 36% YoY however down 5% QoQ (in line with our estimate of 8.9 MT). For Q2FY22, blended realisations were at Rs.7443/tonne, up 120% YoY and 9% QoQ, higher than our estimate of Rs.6500/tonne. For the quarter, the revenue from operations were at Rs.6794 crore, up 205% YoY & 4% QoQ, higher than our estimate of Rs.5944 crore. EBIDTA for the quarter was at Rs.3115 crore, up 202% YoY but down 25%QoQ, higher than our estimate of Rs.2679 crore. Ensuing PAT came in at Rs.2341 crore, up 202% YoY but down 27% QoQ, higher than our estimate of Rs.2074 crore.

 

Our Perspective:

Better than expected realisation aided NMDC to report healthy EBITDA/tonne for Q2FY22. For Q2FY22, EBITDA/tonne came in at Rs.3488/tonne, higher than our estimate of Rs.3000/tonne (EBITDA/tonne of Rs. 1560/tonne in Q2FY22 and Rs.4421/tonne in Q1FY22). Blended realisation increased on a QoQ basis on account of better grades sequentially. Going forward for FY22, NMDC is targeting volume of 44 MT. On the back of healthy domestic demand, it is likely that NMDC’s iron ore sales volume in H2FY22 is expected to be higher than that in H1FY22 (During H1FY22, NMDC’s sales volume stood at 18.4 MT).