Citi has reiterated its sell rating on NMDC with a target price of ₹63, despite the state-run miner delivering a sequential improvement in margins in the first quarter of FY26. The company reported a 21% quarter-on-quarter rise in EBITDA, driven by stronger realisations, which were up 7%, and lower costs. However, volumes declined 9% during the period, partially offsetting the pricing benefit. EBITDA margin improved to 37% from 29% in the previous quarter, though it remained below the 44% recorded a year earlier.
Citi noted that with the price hike implemented in August 2025, current realisations are largely in line with first-quarter levels. The brokerage expects prices to correct in the medium term, pointing to several headwinds. These include NMDC’s current price premium to export parity of 26%, compared with 20% in FY25, which it believes is unsustainable; the planned capacity expansion by Lloyds Metal from 10 million tonnes to 25 million tonnes in FY26; limited upside for domestic steel prices, which are already close to import parity; and muted global pricing trends.
The brokerage’s cautious stance reflects its view that while near-term earnings have benefited from better margins, structural pressures from capacity growth in the sector, a narrowing price premium, and weak global steel demand could cap upside potential for NMDC’s stock over the medium term.
Disclaimer: The views and recommendations made in this article are those of Citi. This article does not constitute investment advice. Investors should consult their financial advisors before making any investment decisions.
