NMDC (Q4 FY12)

India Infoline News Service | Mumbai |

Topline for the quarter decreased 31.2% yoy to Rs26bn due to a decline in both, realizations and volumes. The company’s iron ore sales volume declined 23.8% yoy to 6.4mn tons as volumes were impacted due to the Naxal activity around the mines.

CMP Rs168, Target Rs202, Upside 20.2%
  • Topline for the quarter decreased 31.2% yoy to Rs26bn due to a decline in both, realizations and volumes. The company’s iron ore sales volume declined 23.8% yoy to 6.4mn tons as volumes were impacted due to the Naxal activity around the mines. On a qoq basis, sales volume remained flat. Production too was impacted during the quarter, declining 19.3% yoy and 1.8% qoq to 7mn tons. Blended realizations for the quarter stood at Rs4,054/ton due to a reduction in the rates of fines. The company at the start of the quarter has announced a 20% cut in prices for fines and a 3% cut in lump prices. The decline in realizations on a yoy basis was also due to higher domestic exposure.
     
    Operating performance
      Q4 FY12 Q4 FY11 % yoy Q3 FY12 % qoq
    Production volumes (mn tons) 7.0 8.7 (19.3) 7.2 (1.8)
    Sales volume (mn tons) 6.4 8.4 (23.8) 6.4 -
    Realisation (Rs/ton) 4,054 4,488 (9.7) 4,409 (8.1)
    EBIDTA/ton (RS/ton) 3,090 3,261 (5.2) 3,532 (12.5)
    Source: Company, India Infoline Research 
  • Operating profit plunged 27.8% yoy to Rs19.8bn led by a jump in costs of stores and spares and also due to higher other expenditure. EBIDTA/ton declined from Rs3,532/ton in Q3 FY12 to Rs3,090/ton due to lower realizations. Costs per ton of ore rose from Rs827/ton in Q3 FY12 to Rs964/ton during the quarter. On a yoy basis, EBIDTA/ton was lower due to higher other expenditure and higher iron ore royalty.
  • 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 Naxal 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 recently announced an increase in its iron ore pricing 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 Rs202.
Result table
(Rs m) Q4 FY12  Q4 FY11 % yoy Q3 FY12 % qoq
Net sales 25,946 37,698 (31.2) 28,220 (8.1)
Material costs (473) (383) 23.3 (263) 79.7
Personnel costs (1,265) (1,471) (14.0) (1,389) (8.9)
Selling expenses 23 (3,996) (100.6) (445) (105.1)
Other overheads (4,457) (4,457) (0.0) (3,516) 26.8
Operating profit 19,774 27,390 (27.8) 22,607 (12.5)
OPM (%) 76.2 72.7 355 bps 80.1 (390) bps
Depreciation (321) (420) (23.5) (345) (6.7)
Other income 5,468 4,433 23.3 5,254 4.1
PBT 24,920 31,403 (20.6) 27,516 (9.4)
Tax (7,970) (10,416) (23.5) (8,928) (10.7)
Effective tax rate (%) 32.0 33.2   32.4  
Adjusted PAT 16,951 20,986 (19.2) 18,588 (8.8)
Adj. PAT margin (%) 65.3 55.7 966 bps 65.9 (54) bps
Reported PAT 16,951 20,986 (19.2) 18,588 (8.8)
Ann. EPS (Rs) 17.1 21.2 (19.2) 18.8 (8.8)
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
BSE 128.40 [1.65] ([1.27]%)
NSE 128.60 [1.40] ([1.08]%)

***Note: This is a NSE Chart

 

Advertisements

  • Save upto Rs.2.67 lakh with Pradhan Mantri Awas Yojana ...Know more
  • Now Save Rs.3150 on your Demat Account ...Click here
  • Now get IIFL Personal Loan in just 8* hours...APPLY NOW!
  • Get the most detailed result analysis on the web - Real Fast!
  • Actionable & Award-Winning Research on 500 Listed Indian Companies.