Downgraded NMDC to 'hold'- TP maintained at Rs.197 - Geojit BNP Paribas Financial Services

- The stock is downgraded to hold as it has reached the target price after rising 19% in the past one month.

- At the current level, the stock now factors the better ore price and the volume outlook and the risk- reward ratio is less appealing.

- To get a 10% return from the current level, ore price should improve 4-6% and the volume to expand around 8-11%.

- Company's yoy volume growth improved to 15% in April- May from 4% in 2012.

- Its 3 million tpa railway debottlenecking project has started trial runs.

- On the pricing front, reports indicate that the company is planning to raise ore prices by 5% in 2QFY13.

- Near term gains from the stock seems unlikely due to softening scrap prices and the onset of the seasonally weak monsoon period.

- Company specific triggers have already worked and the only near-term trigger remaining is policy easing in China. This may lead to better demand for iron ore. But, this could be expected by August-September.

Source : Equity Bulls

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