2 For 1 Bonus: NMDC shares fall after Q2 EBITDA miss, top Metals loser

Shares of state-run NMDC Ltd. were trading with losses of as much as 4% on Tuesday, November 12. The stock is also the top loser on the Nifty Metal index.

Global brokerage firm Citi maintains a 'Sell' recommendation on NMDC, with a price target of ₹195 per share.

NMDC's EBITDA dropped 39% quarter-on-quarter due to weaker realisations, increased costs, and lower volumes. Sequentially, costs excluding royalties surged.

Citi attributed NMDC's underperformance relative to estimates primarily to higher costs.

Another brokerage house JPMorgan maintains an 'Underweight' rating on NMDC, with a price target of ₹210 per share.

The second-quarter EBITDA miss was driven by unfavorable inventory impact and higher other expenses.

JPMorgan mentioned that it didn't expect significant changes to consensus estimates, as the inventory impact is likely to reverse in the second half.

The brokerage expects NMDC shares to react slightly negatively given the EBITDA miss.

The board of NMDC has approved a bonus issue of equity shares in the proportion of 2:1, which means for every one share investors hold in the company, they will get two additional shares.

This is the first instance in the last 16 years that NMDC will be considering a bonus issue of shares.

The last instance of the state-run company issuing bonus shares was back in 2008, when it issued two bonus shares for every one share held.

NMDC made the announcement on November 11, along with its September quarter results, where it posted a 23% year-on-year rise in its standalone net profit at ₹1,269 crore.

The company's revenue surged 20% on-year to ₹4,807 crore during the quarter.

Shares of NMDC are currently trading 3.80% lower at ₹224.08 and are now 22% away from their recent peak of ₹286.35. The stock has gained 6% so far in 2024.

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