NMDC shares jumped 6% today; check brokerage view, technical analysis & more

Shares of state-run NMDC Ltd on Wednesday surged 5.76 per cent to settle at Rs 248. At this price, the stock traded 1.84 per cent lower than its one-year high value of Rs 252.65, a level seen earlier this year on February 15. Moreover, NMDC shares have given multibagger returns by rallying 139.04 per cent from its 52-week low price of Rs 103.75, hit on May 19, 2023.

Brokerage LKP Research has initiated its coverage on the stock with a 'Buy' call for a one-year upside target price of Rs 297. "We believe with the onset of key structural changes in the economy and a decade long investment cycle triggered largely by the government capex is expected to continue and in comparison to its international counterparts, the domestic steel sector stands in a favorable position. It is projected that the domestic crude steel capacity will hit around 175 MT in FY24, boasting an estimated capacity utilization rate of approximately 82 per cent. This translates to an anticipated iron ore requirement of roughly 282 MT in FY24E with NMDC commanding a around 16% market share," LKP stated.

"We Initiate coverage on NMDC based on the following factors: 1) NMDC stands to capitalize on rising steel demand as India's steel industry doubles by 2030. 2) This PSE is poised to be a key beneficiary of a potential repeat of the 2003-2007 capex boom, given the resemblance of the current economic landscape to that of 2003-2008. 3) Aggressive mine capacity expansion to meet upcoming demand. 4) Abundant availability of high-quality ores for the next 40 years," it mentioned.

Over FY24E-26E we expect NMDC to clock a Revenue/EBITDA/PAT CAGR of 12.9 per cent/18.8 per cent/19.1 per cent, respectively, LKP added.

"The Indian steel industry is set to double by 2030, with major players like Tata Steel and SAIL expanding their capacities. NMDC, a significant iron ore producer, stands to benefit from this growth as companies without iron ore integration seek to meet rising demand," the brokerage underscored.

Technical analysts largely remained slightly bullish on the counter. Key support level will be at Rs 230.

AR Ramachandran from Tips2trades said, "NMDC looks slightly bullish on daily charts with strong support at Rs 230. A daily close above resistance of Rs 251 could lead it to an upside target of Rs 285 in the near term."

Jigar S Patel, Senior Manager - Technical Research Analyst at Anand Rathi Shares and Stock Brokers, said, "Support will be at Rs 230 and resistance at Rs 251. A decisive close above Rs 251 level may trigger a further upside till Rs 260. The expected trading range will be between Rs 225 and Rs 265 for a month."

Operating under the Ministry of Steel, NMDC is a 'Navratna' public sector enterprise and owns and operates highly mechanized iron ore mines in Chhattisgarh and Karnataka. As of March 2024, the government holds a 60.79 per cent stake in the PSU.