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Friday, October 14, 2011

NMDC Ltd:-Buy/sell/growth prospects and recommendation,news and results,target price and analysis,view and outlook,multibagger

Scripscan:NMDC Ltd
BSE code:526371

Story:The ban of iron ore mining is not applicable to this company. They have their major presence in Chattisgarh and Karnataka and so they are not affected and considering the demand and the layoff which have been happening in Karnataka probably this company will stand to gain and given by the mining targets to the Apex Court by the company is quite swift. In fact that gives them an incremental ability of going and raising it by 40%.Going by the financials, the networth of the company is Rs 19000 crore and this entire amount is held by the company as cash and bank balances. In Q1, Rs 2800 crore was topline and Rs 1800 crore was the bottom line, which translates into an EPS of Rs 4.50 on an equity base of Rs 400 crore with face value of one. So it is likely that the company should be able to post about Rs 20 for FY12.If I knock off the cash held by the company, which works out to about Rs 50 per share, so that gives a value of about Rs 200 per share. So this gives a valuation of close to about 8.5 times,Coal India is now ruling close to 15-16 times.Even Sesa Goa which is largely affected by this mining ban even that stock is ruling at PE multiple of 6 to 7. So, if I go by the shareholding pattern Coal India and this company has the same share holding pattern; 90% government, about 8-9% held by the institution and very low public float.So the moment you get to know or you get to see renewed buying interest coming in the stock, I think this can easily move to about Rs 280 maybe in the next couple of months. Even if somebody wants to hold it for a very longer time for couple of years, I think this is capable to give annualized return of 20% because from hereon the risk is very low. If I consider from the FPO price and from any other peer comparison and all that,I found the stock to be quite attractive at the current levels.

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