NMDC (Q1 FY13)

India Infoline News Service | Mumbai |

Topline for the quarter increased 2.1% yoy to Rs28.5bn as the impact of lower volumes was offset by higher realisations.

CMP Rs186, Target Rs208, Upside 11.9% 
  • Topline for the quarter increased 2.1% yoy to Rs28.5bn as the impact of lower volumes was offset by higher realisations. The company’s iron ore sales volume declined 1.4% yoy to 6.9mn tons. On a qoq basis, sales volume increased 7.1% qoq as previous quarter production was impacted by Maoist movement. Production declined marginally on a yoy basis to 6.1mn tons, but 13.5% lower on a qoq basis. Blended realisations for the quarter stood at Rs4,143/ton, lower than our estimate. We believe the lower than expected realisation would be largely due to higher sales of iron ore fines.

Operating performance
  Q1 FY13 Q1 FY12 % yoy Q4 FY12 % qoq
Production volumes (mn tons) 6.1 6.1 (0.5) 7.0 (13.5)
Sales volume (mn tons) 6.9 7.0 (1.4) 6.4 7.1
Realisation (Rs/ton) 4,143 4,004 3.5 4,054 2.2
EBIDTA/ton (RS/ton) 3,358 3,244 3.5 3,090 8.7
Source: Company, India Infoline Research 
  • Operating profit increased by 2.1% yoy to Rs23bn led by higher realisations. EBIDTA/ton expanded from Rs3,090/ton in Q4 FY12 to Rs3,358/ton due to higher realizations and a decline in all major costs. Costs per ton of ore declined sharply from Rs964/ton in Q4 FY12 to Rs785/ton during the quarter. On a yoy basis, EBIDTA/ton was higher as the impact of higher costs was more than offset by strong realisations.
  • We revise estimates over the next two years incorporating the decline in global iron ore prices and slower growth in volumes. The company’s performance has been consistently impacted by the Maoist activities in Chattisgarh. In addition to this, the ramp up in Karnataka has been slower than expected. We now estimate FY13 volumes to be 29.5mn tons and FY14 at 32mn tons. NMDC has increased its iron ore prices for fines and lumps from April ’12 onwards. We believe the company would continue to report strong earnings over the next two years and maintain our BUY rating with a 9-month price target of Rs208.
Result table
(Rs m) Q1 FY13  Q1 FY12 % yoy Q4 FY12 % qoq
Net sales 28,404 27,826 2.1 25,946 9.5
Material costs (492) (450) 9.4 (473) 4.1
Personnel costs (1,353) (1,292) 4.7 (1,265) 6.9
Selling expenses (361) (427) (15.5) 23 (1,683.3)
Other overheads (3,178) (3,110) 2.2 (4,457) (28.7)
Operating profit 23,020 22,547 2.1 19,774 16.4
OPM (%) 81.0 81.0 2 bps 76.2 484 bps
Depreciation (328) (338) (3.0) (321) 2.0
Other income 5,521 4,418 25.0 5,468 1.0
PBT 28,214 26,627 6.0 24,920 13.2
Tax (9,154) (8,615) 6.3 (7,970) 14.9
Effective tax rate (%) 32.4 32.4   32.0  
Adjusted PAT 19,060 18,012 5.8 16,951 12.4
Adj. PAT margin (%) 67.1 64.7 238 bps 65.3 177 bps
Reported PAT 19,060 18,012 5.8 16,951 12.4
Ann. EPS (Rs) 19.2 18.2 5.8 17.1 12.4
Source: Company, India Infoline Research
 
Financial Summary
Y/e 31 Mar (Rs m) FY11 FY12E FY13E FY14E
Revenues 113,689 112,619 120,235 136,740
yoy growth (%) 82.2 (0.9) 6.8 13.7
Operating profit 86,230 89,260 93,505 107,151
OPM (%) 75.8 79.3 77.8 78.4
Pre-ex
BSE 131.00 [0.40] ([0.30]%)
NSE 130.75 [0.80] ([0.61]%)

***Note: This is a NSE Chart

 

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