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NMDC reported 1QFY12 iron ore EBITDA of US$72/t flat yoy and qoq versus our expectation of
US$60/t. Sales volumes at 6.9mt were up 8% yoy versus our expectation of 8.2mt. Aided by other
income, net profit at Rs18bn was 8% above our estimates. NMDC trades at 12.3x/10x FY12/13F
earnings. Maintain Buy.
Realizations were robust given the export duty overhang
Average iron ore realizations of US$87/t (+3% yoy) versus our expectation of US$80/t were
quite strong given that i) the export volumes would have been likely impacted due to the delay
in government approvals to renew the export contracts with Japanese and Korean steel mills
and ii) domestic prices for iron ore fines were under pressure due to a 4X increase in export
duties of fines. 1QFY12 production volumes were at 6.1mt (+6% yoy and -30% qoq) while
sales volumes were at 6.9mt (+8% yoy and -18% qoq) versus our estimate of 8.2mt.
EBITDA/t at US$72/t - among the best globally
Net revenues were at Rs27.8bn (+11% yoy and -26% qoq). Selling expenses including freight
expectedly decreased sharply to Rs0.4bn (-66% yoy and -89% qoq) due to nil or negligible
export volumes. Domestic freight expenses are largely borne by the customer. Royalty cost
was lower than expected at Rs2.3bn (+71% yoy and -29% qoq). EBITDA at Rs22.5bn (+10%
yoy and -18% qoq) was 2% higher than our estimate of Rs22.1bn. Other income was higherthan-
expected at Rs4.5bn (+99% yoy and flat qoq) versus our estimate of Rs3.1bn. We note
that this included a excess wage write back of Rs0.6bn in 4QFY11. The higher other income
drove net income to Rs18bn (+20% yoy and -14% qoq), 8% higher than our estimate of
Rs16.6bn.
Expansion on track
NMDC expects the uniflow system being implemented by the Indian Railways on the Vizag
line to be complete in the next 3-6 months. This would augment the logistics capacity of the
line by 3MT. The 11b deposit in Bailadila, Chhattisgarh is expected to commission by
December 2011 and would set the pace for strong volume growth in FY13. This mine is
expected to have an annual output of 7mt.
Valuations remain attractive. Maintain Buy with TP of Rs298.
NMDC trades at a PE of 12.3x FY12F earnings and 10x FY13F earnings, attractive in our
view. We have a Buy rating on NMDC with TP of Rs298.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
NMDC reported 1QFY12 iron ore EBITDA of US$72/t flat yoy and qoq versus our expectation of
US$60/t. Sales volumes at 6.9mt were up 8% yoy versus our expectation of 8.2mt. Aided by other
income, net profit at Rs18bn was 8% above our estimates. NMDC trades at 12.3x/10x FY12/13F
earnings. Maintain Buy.
Realizations were robust given the export duty overhang
Average iron ore realizations of US$87/t (+3% yoy) versus our expectation of US$80/t were
quite strong given that i) the export volumes would have been likely impacted due to the delay
in government approvals to renew the export contracts with Japanese and Korean steel mills
and ii) domestic prices for iron ore fines were under pressure due to a 4X increase in export
duties of fines. 1QFY12 production volumes were at 6.1mt (+6% yoy and -30% qoq) while
sales volumes were at 6.9mt (+8% yoy and -18% qoq) versus our estimate of 8.2mt.
EBITDA/t at US$72/t - among the best globally
Net revenues were at Rs27.8bn (+11% yoy and -26% qoq). Selling expenses including freight
expectedly decreased sharply to Rs0.4bn (-66% yoy and -89% qoq) due to nil or negligible
export volumes. Domestic freight expenses are largely borne by the customer. Royalty cost
was lower than expected at Rs2.3bn (+71% yoy and -29% qoq). EBITDA at Rs22.5bn (+10%
yoy and -18% qoq) was 2% higher than our estimate of Rs22.1bn. Other income was higherthan-
expected at Rs4.5bn (+99% yoy and flat qoq) versus our estimate of Rs3.1bn. We note
that this included a excess wage write back of Rs0.6bn in 4QFY11. The higher other income
drove net income to Rs18bn (+20% yoy and -14% qoq), 8% higher than our estimate of
Rs16.6bn.
Expansion on track
NMDC expects the uniflow system being implemented by the Indian Railways on the Vizag
line to be complete in the next 3-6 months. This would augment the logistics capacity of the
line by 3MT. The 11b deposit in Bailadila, Chhattisgarh is expected to commission by
December 2011 and would set the pace for strong volume growth in FY13. This mine is
expected to have an annual output of 7mt.
Valuations remain attractive. Maintain Buy with TP of Rs298.
NMDC trades at a PE of 12.3x FY12F earnings and 10x FY13F earnings, attractive in our
view. We have a Buy rating on NMDC with TP of Rs298.
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