Shares of NMDC Ltd have risen about 11% so far in September, buoyed by robust sales growth even in a typically slow season. Sales volumes climbed 8% year-on-year in August, a seasonally weak month because of the monsoon rains, pushing overall growth in the first two months of the September quarter (Q2FY26) past 10%. Production, meanwhile, surged 23% as the state-run miner gears up for an expected demand pick-up.
Demand outlook remains bright, underpinned by the expected ramp-up of recently commissioned steel mills. Yet, the iron ore producer remains exposed to volatility in global prices and an expected rise in domestic output from rival miners.
NMDC’s solid August volumes came despite a price hike at the start of the month, underscoring strong offtake. The company had raised prices in May to cash-in on the improved outlook for the steel sector following the imposition of safeguard duty, but rolled them back in June and July. Average prices in Q2FY26 so far are 3.5%-3.8% higher year-on-year, setting up the quarter for robust performance.
The domestic iron ore market is also benefiting from firm global prices, thanks to a build-up of inventory by Chinese companies and a planned 2025 production cut announced by global mining major Vale S.A. According to Bloomberg, Chinese spot prices are around $138 a tonne, up 15% from early-July lows. NMDC’s prices now stand at 56.8% of international rates, down from about 60% in FY25, according to Antique Stock Broking, giving room for further price hikes.
“We favour NMDC’s strong operational capacity, net cash position, capacity expansion plans (100 mtpa capacity by FY31 and long-term target of 10%-15% increase in revenue from non-iron ore segments like coal, gold, magnetite, and lithium mining prospects in Australia),” said the broking firm.
NMDC has lined up ₹70,000 crore in capital expenditure to expand capacity to 100 million tonnes per annum (mtpa) by FY31, mirroring steelmakers’ growth plans.
Key infrastructure upgrades are underway. The expected completion of doubling of 150 km rail line from Kirandul to Jagdalpur, in Chhattisgarh, by FY26-end would increase evacuation capacity from Bailadila sector mines to 40 million tonnes per annum (mtpa), from current 29 mtpa.
Also, the 15 mtpa slurry pipeline from Bacheli is expected to be completed in FY26 with 74% project completion achieved till FY25. The project also includes a pellet plant and an iron ore processing plant of 2 mtpa each, helping in faster movement of material and achieve higher realization. Its pelletization plant, in JV with KIOCL Ltd, is expected to reach full production of 2.5-3 million tonnes (mt) in FY26, against 0.5 mt in FY25.
FY26 capex guidance is ₹4,000 crore versus ₹3,700 crore for FY25, and should jump in FY27 with a pick-up in construction activity. Production guidance for FY26 is 55 mt, 25% higher year-on-year. Q1FY26 sales volumes rose by 15% and realization was up 9%, but Ebitda growth slowed to 6% to ₹2,500 crore, hurt by higher royalty and other expenses.
NMDC’s stock trades at an enterprise value of 6.4x FY26 estimated Ebitda, as per Bloomberg data, and looks attractively priced. Beyond iron ore prices, investors are also watching the pending assent to the Karnataka Mineral Rights and Bearing Land Tax Bill—passed by the state assembly in December and currently with the President of India—which could shape the stock’s trajectory ahead.
