Brokerage firm Nuvama has maintained its reduce rating on state-run miner GMDC Ltd., assigning a price target of Rs 231 in its latest report. The target implies a steep 59% downside from Monday’s closing levels, making GMDC one of the most overvalued PSU stocks in the brokerage’s coverage universe.
Nuvama said it has lowered its EBITDA estimates for FY26 and FY27 by 10% and 15% respectively to factor in weaker lignite volumes and higher operating costs. The brokerage noted that GMDC’s September quarter performance was significantly weaker after adjusting for a one-time gain. Without this exceptional income, the company would have reported a net loss for the quarter.
Revenue declined 11% year-on-year in Q2, while EBITDA fell sharply—halving compared to last year. The EBITDA margin contracted to 13.2% from 24% in the year-ago period, reflecting rising costs and lower volumes.
GMDC’s new thermal power plant, which became operational in Q2, is expected to see meaningful ramp-up only in the fourth quarter of the current financial year. Nuvama expects lignite volume growth of 26% in FY27, supported by the Bhavnagar mine expansion.
On the rare earths business, Nuvama said any earnings contribution is unlikely before FY30. “We have factored in all the benefits of lignite, coal and power in our estimates,” the brokerage said, adding that GMDC’s current valuations—19x and 15x estimated EV/EBITDA for FY27 and FY28—remain elevated.
Nuvama is currently the only brokerage covering GMDC.
