NMDC: Motilal Oswal Financial Services Recommends a ‘Buy’ with Target Price of ₹280
Synopsis
Motilal Oswal Financial Services has issued a ‘buy’ recommendation for NMDC Ltd., setting a target price of ₹280. The current market price of NMDC is ₹218, indicating a potential upside. The firm believes that despite a recent price cut in Q2 FY25, average selling prices (ASP) are likely to improve in the second half of FY25. At the current market price, NMDC is trading at 4.7x FY26E EV/EBITDA.
Key Points:
- Valuation and Growth Outlook: NMDC is valued attractively, trading at 4.7x FY26 estimated EV/EBITDA. Motilal Oswal has slightly lowered its FY26 adjusted profit after tax (APAT) estimates by 5% but maintains a bullish outlook with a revised target price of ₹280 (valued at 6.5x FY26 EV/EBITDA).
- ASP Improvement Expected in 2H FY25: Despite a recent price dip, the firm expects average selling prices to improve in the second half of FY25, supporting the earnings outlook.
- Company Overview: Established in 1958, NMDC Ltd. is a large-cap player with a market capitalization of ₹63,726.02 crore. The company operates in the mining sector and is one of India’s leading iron ore producers.
Given its robust fundamentals, attractive valuations, and expected improvement in prices, Motilal Oswal Financial Services recommends a buy on NMDC, with significant potential for returns over the medium term.
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