NMDC shares fell over 4 per cent intraday on Wednesday after the state-owned iron ore miner announced disappointing Q1 numbers for June quarter on Tuesday. For the first quarter ended June 30, 2015, the company reported net profit of Rs 1,010.12 crore, down 47.25 per cent against Rs 1,915.01 crore in the corresponding quarter a year ago.
At 1.17 pm, NMDC shares were trading 2.67 per cent down at Rs 100.25. It opened at Rs 101 and has touched a high and low of Rs 101.35 and Rs 98, in trade so far. The BSE Sensex was down 212 points at 27,653.75 at the same time.
Revenue of the company declined 48.04 per cent year-on-year to Rs 1,806.43 crore. The figure stood at Rs 3,476.73 crore in the same quarter last year.
Falling iron ore prices have been weighing on the performance of the company. The iron ore futures contract traded on China’s Dalian exchange declined 22 per cent on year-to-date basis.
According to IDFC, pricing pressure is unlikely to relent, as domestic merchant ore supply will not outpace demand till domestic steel production picks up which is 12-15 months away.
A research report by Centrum Broking said, “We maintain ‘Hold’ on NMDC with a revised target price of Rs 100 as we expect an uncertain pricing outlook and restart of negative-EBITDA exports from Q2 to keep earnings growth negative in the ongoing financial year and costs to escalate once contribution to the District Mineral Foundation (DMF) as part of the new MMDR bill gets notified. Q1 results would have been much weaker had the DMF provision been provided for and exports were continued. As a result, valuation de-rating is unlikely to reverse in the medium term and positives like strong balance sheet and high dividend yield would remain ignored in the current scenario.”
The scrip closed 3.01 per cent lower at Rs 99.90.
(With inputs from Reuters)