NMDC - Lumps price further slashed; volume to be the key - Emkay

Reco: BUY
CMP: Rs 135
Target Price: Rs 176

- NMDC has cut iron ore lumps prices by 2.17% for March to Rs 4950/ t and kept fines prices same at Rs 2610/ t taking blended realizations for Q4FY13 to ~Rs 3625/ t

- The reasons for the price cut can be attributed to premium over the other producers mainly in Orissa, slower offtake and inventory of ~1.7 mt of lumps

- Believe, the cut in prices should help NMDC to see better sales volume going ahead. During January and February the company sold 5.1 mt indicating Q4FY13 sales to be 7.5- 8 mt

- Cut our realization assumptions for Q4FY13 and FY14, while raising Q4FY13 vol. to 7.5 mt. Stock still attractive at 4.2x FY14 EV/EBITDA. Maintain BUY with revised TP of Rs 176.

Source : Equity Bulls

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