Result Update

August 14, 2015

Rating matrix
Rating
Target
Target Period
Potential Upside

:
:
:
:

NMDC (NATMIN)

Hold
| 100
12 months
3%

Outlook remains bleak

Whats Changed?
Target
EPS FY16E
EPS FY17E
Rating

Changed from | 135 to | 100

Changed from | 12.0 to | 10.1
Changed from | 13.5 to | 11.0
Unchanged

Quarterly Performance
Revenue
EBITDA
EBITDA (%)
PAT

Q1FY16 Q1FY15
1,806.4 3,476.7
1,102.7 2,402.1
61.0
69.1
1,010.1 1,915.0

YoY (%) Q4FY15

-48.0 2,828.6
-54.1 1,421.3
-805 bps
50.2
-47.3 1,347.1

QoQ (%)
-36.1
-22.4
1079 bps
-25.0

Key Financials
| Crore
Net Sales
EBITDA
Net Profit
EPS (|)

FY14
11,899.5
7,771.3
6,420.0
16.2

FY15E
12,197.7
7,777.7
6,421.9
16.2

FY16E
9,158.2
4,513.3
4,014.8
10.1

FY17E
10,513.9
5,214.1
4,372.6
11.0

FY15E
6.0
6.2
81.5
2.6
1.2
19.9
23.6

FY16E
9.6
9.9
84.7
4.8
1.1
12.0
12.9

FY17E
8.8
9.1
88.7
5.3
1.1
12.4
14.1

Valuation summary
P/E
Target P/E
BV
EV / EBITDA
P/BV
RoNW
RoCE

FY14
6.0
6.2
75.6
2.5
1.3
21.4
25.4

Stock data
Particular
Market Capitalization
Total Debt (FY15E)
Cash and Investments (FY15E)
EV
52 week H/L
Equity capital
Face value

Amount
| 38457.6 Crore
| 0 Crore
| 18443.2 Crore
| 20014.4 Crore
188 / 96
| 396.5 Crore
|1

Price performance (%)

Return %
Coal India
NMDC

1M
-11.6
-12.6

3M
0.6
-23.1

| 97

6M
0.7
-28.8

12M
1.9
-42.4

Research Analyst
Dewang Sanghavi
dewang.sanghavi@icicisecurities.com

ICICI Securities Ltd | Retail Equity Research

NMDC reported a mixed set of Q1FY16 numbers wherein the topline

came in lower than our estimates while EBITDA and PAT came in
higher than our estimates. EBITDA and PAT came in higher than our
estimate driven by lower-than-expected costs (royalty expense and
selling expenses came in notably lower than our expectation)
The company reported income from operations of | 1806.4 crore for
the quarter, down 36.1% QoQ and 48.0% YoY and below our
estimate of | 2072.0 crore. The topline came in lower than our
expectation on account of lower-than-expected blended realisations.
Blended realisations came in at | 2688/tonne (down 26.1% QoQ and
32.9% YoY) and came in below our estimate of | 3075/tonne
EBITDA was at | 1102.7 crore (EBITDA margin: 61.0%) and above
our estimate of | 1002.8 crore (EBITDA margin: 48.4%). For the
quarter, NMDC has not considered the impact of District Mineral
Foundation and National Mineral Exploration Trust under the MMDR
Act 2015, pending notification of rules by the government. Hence,
EBITDA margin came in higher than our estimate. Consequent PAT
came in at | 1010.1 crore (our estimate: | 921.5 crore)
Price cuts adversely impact EBITDA/tonne
On the back of the weakness seen in global iron ore prices, NMDC has cut
its prices notably in the last couple of quarters. On the back of easing of
domestic supply constraints from a gradual re-opening of mines in
Karnataka after lifting of the mining ban, coupled with competitive lower
priced imports, the company had to resort to steep price cuts. NMDC has
reduced its fines prices from | 3160/tonne in November 2014 to
| 1660/tonne in August 2015 and lump ore prices from | 4400/tonne in
November 2014 to | 2950/tonne in August 2015. Subsequently, NMDCs
realisations have declined from | 4009/tonne in Q1FY15 to | 2688/tonne
in Q1FY16 while EBITDA/tonne declined from | 2800/tonne in Q1FY15 to
| 1658/toone in Q1FY16. Over the short to medium term, we expect
EBITDA/tonne to stay muted due to subdued global iron ore prices.
High quality asset with large reserve base
NMDC has a large reserve base with high grade deposits and significant
mine life. As on January 1, 2010, as per JORC, the total iron ore reserve
and resource base is at 1360.7 MT. At the current production run rate, the
company has a mine life of ~42 years (reserves: production - 42). A
higher mine life coupled with superior quality deposit provide strong
earnings visibility.
Outlook remains challenging; maintain HOLD
Going forward, NMDCs performance is expected to remain muted over
the next couple of quarters due to subdued global iron ore prices. During
the quarter, NMDC did not make any provision for DMF (as per the MMDR
Amendment Act, 2015) as the bill is still pending final notification of the
rates by the government. Peers have provided for DMF costs based on
assumptions ranging from 100% of royalty at Tata Steel and 50% of
royalty at Hindustan Zinc. NMDC is likely to provide for DMF costs for
earlier quarters starting Q2FY15 given rates will soon be notified by the
government. For FY16E, FY17E we have modelled DMF provision at
100% of royalty. We value the stock at 5.5x FY17E EV/EBITDA and arrive
at a target price of | 100. We have a HOLD recommendation on NMDC.

Variance Analysis
Change in estimates

Q1FY16

Q1FY16E

Q1FY15

YoY (%)

Q4FY15

QoQ (%)

Revenue
Other Income
Employee Expense
Raw Material Expense

1,806.4
488.7
174.3
169.4

2,072.0
446.5
169.1
182.7

3,476.7
541.8
180.8
112.8

-48.0
-9.8
-3.6
50.1

2,828.6
726.2
140.1
192.8

-36.1
-32.7
24.5
-12.2

Royalty & cess

Selling Expense
Other Expense
EBITDA
EBITDA Margin (%)
Depreciation
Interest
Exceptional Items
PBT
Tax Outgo
PAT
Key Metrics
Iron ore sales volume (MT)
Iron ore blended realisations
(|/tonne)
EBITDA/tonne (|/tonne)

164.4

344.1

271.5

-39.5

388.5

-57.7

16.0
179.7
1,102.7
61.0
40.1
0.0
0.0
1,551.3
541.2
1,010.1

198.9
174.4
1,002.8
48.4
40.4
0.0
0.0
1,409.0
487.5
921.5

331.0
178.5
2,402.1
69.1
40.0
0.0
0.0
2,903.9
988.9
1,915.0

-95.2
0.7
-54.1
-805 bps
0.1
NA
NA
-46.6
-45.3
-47.3

287.4
398.6
1,421.3
50.2
28.0
0.0
55.4
2,064.1
717.0
1,347.1

-94.4
-54.9
-22.4
1079 bps
43.0
NA
NA
-24.8
-24.5
-25.0

6.7

6.6

8.6

-22.7

7.7

-13.6

2,688
1,658

3,075
1,525

4,009
2,800

-32.9
-40.8

3,639
1,851

-26.1
-10.4

Comments
Topline came in lower than our estimate on the back of muted
realisations
Other income came in broadly in line with our estimate

Royalty expense came in lower than our estimate as the company

has not considered the impact of District Mineral Foundation and
National Mineral Exploration Trust under the MMDR Act 2015,
pending notification of rules by the government
Selling expense came in lower than our estimate on the back of
negligible exports
Reported EBITDA came in higher than our estimate

PAT came in higher than our estimate

Iron ore sales volume came in broadly in line with our estimates
Blended realisations came in lower than our estimate on the back of
negligible exports
Reported EBITDA/tonne came in higher than our estimate

Source: Company, ICICIdirect.com Research

Change in estimates
(| Crore)
Total Op. Income
EBITDA
EBITDA Margin (%)
PAT
EPS (|)

Old
11,683.9
5,781.8
49.5

FY16E
New
9,326.9
4,513.3
48.4

% Change
-20.2
-21.9
-109 bps

Old
13,904.4
7,005.7
50.4

FY17E
New
10,763.9
5,214.1
48.4

% Change
-22.6
-25.6
-194 bps

4,748.9
12.0

4,014.8
10.1

-15.5
-15.5

5,335.2
13.5

4,372.6
11.0

-18.0
-18.0

Comments
Estimates revised downwards for FY16E and FY17E

Source: Company, ICICIdirect.com Research

Assumptions
FY15
Iron ore sales volume
(MT)

Current
FY16E
FY17E

30.5

32.0

Earlier
FY16E
FY17E

35.0

32.0

Comments

35.0 Maintained sales volume estimates

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Page 2

Company Analysis
NMDC Ltd (NMDC), a Navratna public sector enterprise, is engaged in
mining iron ore, a key material used in steel manufacturing. The company
is Indias largest iron ore miner having access to superior quality iron ore
assets with reserve & resource (R&R) base of 1361 MT.
Volume led growth to drive earnings
After hitting a peak production level of ~30 MT in FY08, NMDCs output
had been on a declining trend with iron ore production dropping to 24 MT
in FY10 due to the damage done to Essar Steels slurry pipeline in May
2009 (capacity 8 MT, 276 km). Since then, Essar Steel has been sourcing
iron ore from NMDC through rail & road resulting in a gradual increase in
iron ore production to 27.3 MT in FY12 and further to 30.1 MT in FY14.
Going forward, on the back of additional mines coming on stream, we
expect a production volume CAGR of 7.1% in FY15-17E. We have
modelled production volume of 32 MT for FY16E and 35 for FY17E (30.5
MT for FY15).
Exhibit 1: Iron ore production and sales trend

Exhibit 2: Iron ore production (state wise bifurcation) trend

40.0

40

35.0

10.0

million tonne

32.0
32.0

30.5
30.5

30.0
30.5

15.0

27.2
26.3

20.0

35.0
35.0

25.0
27.3
27.3

million tonne

30.0

30
20
10

9.7

9.1

9.3

8.7

19.0

20.9

21.3

23.4

25.3

FY13

FY14

FY15

FY16E

FY17E

4.2

5.6

8.2

21.0

21.7

FY11

FY12

5.0
0.0
FY12

FY13

FY14

Iron ore production

FY15

FY16E

FY17E

Chhattisgarh Total

Karnataka Total

Iron ore total sales

Source: Company, ICICIdirect.com Research

Source: Company, ICICIdirect.com Research

The company produces iron ore from its mining complexes in

Chhattisgarh (Bacheli & Kirandul) and Karnataka (Donimalai &
Kumaraswamy) with most of iron ore coming from Chhattisgarh (~70%).
The companys produce can also be bifurcated into two types i.e. lumps &
fines with fines constituting the maximum of iron ore produced by NMDC.
Exhibit 3: Lumps & fines volume share
Lumps: They are concrete masses of iron ore, which need to
be crushed before charging to blast furnace. They usually have
higher iron ore content than fines and can be charged without
any beneficiation

100%

Fines: Fines are iron ore masses, which have loose binding
and need to be beneficiated before being charged to the blast
furnace. They are readily used as a feed for sintering &
pelletisation process

40%

80%
60%
20%

63%

64%

65%

65%

65%

65%

37%

36%

35%

35%

35%

35%

FY12

FY13

FY14

FY15

FY16E

FY17E

0%

Lumps proportion

Fines proportion

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Page 3

Price cuts adversely impact EBITDA/tonne

On the back of the weakness seen in global iron ore prices NMDC has cut
its prices notably in the last couple of quarters. On the back of easing of
domestic supply constraints from gradual re-opening of mines in
Karnataka after lifting of mining ban, coupled with competitive lower
priced imports, the company had to resort to steep price cuts. NMDC has
reduced its fines prices from | 3160/tonne in November 2014 to
| 1660/tonne in August 2015 and lump ore prices from | 4400/tonne in
November 2014 to | 2950/tonne in August 2015. Subsequently, NMDCs
realisations have declined from | 4009/tonne in Q1FY15 to | 2688/tonne
in Q1FY16 while EBITDA/tonne has declined from | 2800/tonne in Q1FY15
to | 1658/toone in Q1FY16. Over a short to medium term horizon, we
expect EBITDA/tonne to remain muted due to subdued global iron ore
prices.
Sales volume to mirror rise in production
Going forward, on the back of additional mines expected to come on
stream, we expect an iron ore sales volume CAGR of 7.1% in FY15-17E.
We have modelled sales volume of 32 MT for FY16E and 35 for FY17E.
Exhibit 4: Iron ore sales volume

Exhibit 5: Domestic sales vis--vis exports

2.5

2.5

2.3

0.4

1.6

29.5

32.5

10

25.0

28.3

15

28.2

26.3

20

FY14

FY15E

FY16E

FY17E

24.7

27.3

25

26.9

30.0

30.5

30

23.8

30.5

32.0

million tonne

million tonne

35.0

2.6

35

35.0

2.4

40

40.0

5
0

20.0
FY12

FY13

FY14

FY15

FY16E

FY17E

FY11

FY12

FY13

Domestic Sales

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Exports

Source: Company, ICICIdirect.com Research

Page 4

Outlook & valuation

Going forward, NMDCs performance is expected to remain muted over
the next couple of quarters due to subdued global iron ore prices. During
the quarter, NMDC did not make any provision for DMF (as per the MMDR
Amendment Act, 2015) as the bill is still pending final notification of the
rates by the government. Peers have provided for DMF costs based on
assumptions ranging from 100% of royalty at Tata Steel and 50% of
royalty at Hindustan Zinc. NMDC is likely to provide for DMF costs for
earlier quarters starting Q2FY15 given rates will soon be notified by the
government. For FY16E, FY17E we have modelled DMF provision at
100% of royalty. We value the stock at 5.5x FY17E EV/EBITDA and arrive
at a target price of | 100. We have a HOLD recommendation on NMDC.
Exhibit 6: Valuation matrix
Particulars

Value

FY17E EBITDA (| crore)

5214

EV/EBITDA multiple

5.5

Enterprise value (| Crore)

28678

FY17E cash & cash equivalent (| crore)

Implied equity (| crore)
No.of shares
Implied target price (|) (A)

10998
39676
396.5
100

Source: Company, ICICIdirect.com Research

Exhibit 7: Valuation matrix

FY14
FY15E
FY16E
FY17E

Sales
(| cr)
11899.5
12197.7
9158.2
10513.9

Growth
(%)
-0.9
2.5
-24.9
14.8

EPS
(|)
16.2
16.2
10.1
11.0

Growth
(%)
11.8
0.0
-37.5
8.9

PE
(x)
6.0
6.0
9.6
8.8

EV/EBITDA
(x)
2.5
2.6
4.8
5.3

RoNW
(%)
21.4
19.9
12.0
12.4

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Page 5

RoCE
(%)
25.4
23.6
12.9
14.1

Company snapshot
600
500
400
300
Target Price: 100

200
100

Jan-16

Oct-15

Jul-15

Apr-15

Jan-15

Oct-14

Jul-14

Apr-14

Jan-14

Oct-13

Jul-13

Apr-13

Jan-13

Oct-12

Jul-12

Apr-12

Jan-12

Oct-11

Jul-11

Apr-11

Jan-11

Oct-10

Jul-10

Apr-10

Jan-10

Oct-09

Jul-09

Apr-09

Jan-09

Source: Bloomberg, Company, ICICIdirect.com Research

Key events
Date
Apr-08

Event
Speculation over imposition of 15% export duty on exports of iron ore from India (export duty currently prevailing at per tonne basis based on Fe grade)

Nov-08

Revises new contracts for iron ore exports with South Korea and Japan. Undertakes steep price hikes (80-96%) on the same

Jun-09

Naxals blow up Essar Steel's pipeline transporting iron ore fines from NMDC's mines in Chhattisgarh to its beneficiation plant in Andhra Pradesh

Nov-09

Odisha government asks miners to halt work on account of flouting of environmental rules. Domestic iron ore supply restricted

Mar-10

Government divests its stake in NMDC. Share sale price fixed at | 300

Mar-11

Export duty of 20% imposed on iron ore exports from India

Jul-11

Iron ore mining ban imposed in Karnataka with NMDC being the only miner allowed to mine under supervision of Supreme Court of India

Dec-11
Sep-12

Mines & Mineral (Development & Regulation) Bill introduced in Parliament. Proposes payment of amount equivalent to royalty for development of the areas in which
the miners operate. Export duty increased to 30% iron ore exports from India
Mining ban imposed in Goa

Oct-12

NMDC shifts to monthly contracts; cuts iron ore prices

Apr-13

Reports yearly numbers. Proposes a dividend of | 7/share for FY13. Gives strong production guidance

Oct-13

Increases the price of its products for the first time in calendar year 2013. Iron ore fines & lumps prices increased by | 100/tonne

Dec-13

Increases the price of iron ore fines & lumps by | 200 each for December 2013

Source: Company, ICICIdirect.com Research

Top 10 Shareholders
Rank
1
2
3
4
5
6
7
8
9
10

Shareholding Pattern

Name
Latest Filing Date % O/S
Government of India
31-Dec-14 80.00
Life Insurance Corporation of India
11-Apr-15 10.12
LIC Nomura Mutual Fund Asset Management Company
31-Dec-14 1.34
Eastspring Investments (Singapore) Limited
31-Jan-15 0.67
The Vanguard Group, Inc.
30-Apr-15 0.53
Investec Asset Management Ltd.
31-Mar-15 0.50
Matthews International Capital Management, L.L.C.
31-Jan-15 0.33
Robeco Institutional Asset Management B.V.
31-Jan-15 0.29
HSBC Global Asset Management (Hong Kong) Limited
28-Feb-15 0.28
Mellon Capital Management Corporation
30-Apr-15 0.21

Position (m)
3,172.0
401.4
53.1
26.5
20.9
19.8
13.2
11.7
11.1
8.4

Change (m)
0.0
83.6
0.0
0.0
0.1
1.4
-0.1
0.0
0.3
0.2

(in %)
Promoter
FII
DII
Others

Jun-14 Sep-14
80.0
80.0
7.0
6.8
10.2
10.6
2.8
2.6

Dec-14 Mar-15 Mar-15

80.0
80.0
80.0
6.2
4.9
4.0
11.2
11.8
12.5
2.6
3.3
3.5

Source: Reuters, ICICIdirect.com Research

Recent Activity
Buys
Investor name
Life Insurance Corporation of India
PGGM Vermogensbeheer B.V.
Investec Asset Management Ltd.
Religare Invesco Asset Management Company Private Limited
Deutsche Asset & Wealth Management Investment GmbH

Value
168.86m
9.54m
2.81m
2.08m
1.15m

Shares
83.63m
4.15m
1.36m
1.01m
0.60m

Sells
Investor name
Waddell & Reed Investment Management Company
Fidelity Worldwide Investment (UK) Ltd.
Charlemagne Capital (U.K.) Ltd.
T. Rowe Price Associates, Inc.
HSBC Global Asset Management (UK) Limited

Value
-10.86m
-9.70m
-8.14m
-6.61m
-5.73m

Shares
-4.72m
-3.51m
-3.20m
-3.19m
-2.54m

Source: Reuters, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Page 6

Financial summary
Profit and loss statement
(Year-end March)
Operating Income (Iron ore)
Other minerals and services
Total Operating Income
Growth (%)
Raw Material Expenses
Employee Expenses
Royalty & Cess
Selling & other Expenses
Total Operating Expenditure
EBITDA
Growth (%)
Depreciation
Interest
Other Income
PBT
Exceptional Item
Total Tax
PAT
Growth (%)
EPS (|)

(| crore)
FY14
11899.5
158.7
12058.2
12.6
358.9
706.2
960.4
2,261.4
4,286.9
7771.3
5.4
150.4
1.9
2,094.5
9,713.6
-45.5
3,339.0
6,420.0
1.2
16.2

FY15
12197.7
158.7
12356.4
2.5
330.9
700.1
1,390.1
2,157.7
4,578.7
7777.7
0.1
162.2
0.0
2,265.4
9,880.9
113.0
3,346.0
6,421.9
0.0
16.2

FY16E
9158.2
168.8
9326.9
-24.5
394.8
723.9
1,725.9
1,969.0
4,813.6
4513.3
-42.0
172.3
0.0
1,804.6
6,145.6
0.0
2,130.8
4,014.8
-37.5
10.1

FY17E
10513.9
250.0
10763.9
15.4
398.6
647.5
2,237.5
2,266.2
5,549.8
5214.1
15.5
247.5
0.0
1,658.7
6,625.2
0.0
2,252.6
4,372.6
8.9
11.0

Cash flow statement

(Year-end March)
Profit after Tax
Add: Depreciation
(Inc)/dec in Current Assets
Inc/(dec) in CL and Provisions
Others
CF from operating activities
(Inc)/dec in Investments
(Inc)/dec in Fixed Assets
Others
CF from investing activities
Issue/(Buy back) of Equity
Inc/(dec) in loan funds
Dividend paid & dividend tax
Inc/(dec) in Share Cap
Others
CF from financing activities
Net Cash flow
Opening Cash
Closing Cash

(| crore)
FY14
6,420.0
150.4
-812.0
-1,895.8
0.0
3,862.6
-0.7
-2,288.9
1.1
-2,288.5
0.0
0.0
-3,943.2
0.5
0.0
-3,942.7
-2,368.6
21,025.7
18,657.1

FY15
6,421.9
162.2
-490.9
647.4
0.0
6,740.6
-311.6
-2,566.7
2.1
-2,876.1
0.0
0.0
-3,966.1
0.0
-112.3
-4,078.4
-213.9
18,657.1
18,443.2

FY16E
4,014.8
172.3
717.9
-393.9
0.0
4,511.2
-25.0
-3,500.0
0.0
-3,525.0
0.0
0.0
-2,783.2
0.0
0.0
-2,783.2
-1,797.1
18,443.2
16,646.1

FY17E
4,372.6
247.5
-605.2
145.5
0.0
4,160.5
-25.0
-7,000.0
0.0
-7,025.0
0.0
0.0
-2,783.2
0.0
0.0
-2,783.2
-5,647.7
16,646.1
10,998.4

FY15

FY16E

FY17E

16.2
16.6
81.5
8.6
46.5

10.1
10.6
84.7
6.0
42.0

11.0
11.7
88.7
6.0
27.7

62.9
80.0
52.6
20.7
52.4
40.9

48.4
65.9
43.8
22.0
52.0
40.0

48.4
61.6
41.6
22.0
51.0
38.0

19.9
23.6
57.1

12.0
12.9
26.6

12.4
14.1
21.1

6.0
2.6
1.6
3.2
1.2

9.6
4.8
2.4
4.2
1.1

8.8
5.3
2.6
3.7
1.1

0.0
0.0
12.4
12.1

0.0
0.0
13.9
13.6

0.0
0.0
9.9
9.5

Source: Company, ICICIdirect.com Research

Source: Company, ICICIdirect.com Research

Balance sheet

(| crore)

(Year-end March)
Liabilities
Equity Capital
Reserve and Surplus
Total Shareholders funds
Total Debt
Deferred Tax Liability
Minority Interest / Others
Total Liabilities

FY14

FY15

FY16E

FY17E

396.5
29,591.8
29,988.3
0.0
107.3
29.1
30,124.5

396.5
31,935.3
32,331.7
0.0
98.4
40.1
32,470.2

396.5
33,166.8
33,563.3
0.0
98.4
40.1
33,701.8

396.5
34,756.3
35,152.7
0.0
98.4
40.1
35,291.2

Assets
Gross Block
Less: Acc Depreciation
Net Block
Capital WIP
Total Fixed Assets
Investments
Inventory
Debtors
Loans and Advances
Other Current Assets
Cash
Total Current Assets
Current Liabilities
Provisions
Current Liabilities & Prov
Net Current Assets
Others Assets
Application of Funds

3,127.5
1,488.3
1,639.2
5,000.0
6,639.2
250.4
681.2
1,448.4
3,069.3
731.3
18,657.1
24,587.2
1,338.9
13.4
1,352.3
23,235.0
0.0
30,124.5

3,627.5
1,650.5
1,977.0
7,066.7
9,043.7
561.9
691.9
1,752.3
2,963.7
1,013.1
18,443.2
24,864.2
1,367.1
632.5
1,999.7
22,864.5
0.0
32,470.2

8,127.5
1,822.8
6,304.7
6,066.7
12,371.4
586.9
552.0
1,304.7
2,747.5
1,099.0
16,646.1
22,349.3
1,003.6
602.2
1,605.8
20,743.4
0.0
33,701.8

16,627.5
2,070.4
14,557.1
4,566.7
19,123.8
611.9
633.7
1,469.1
2,943.9
1,261.7
10,998.4
17,306.8
1,094.6
656.8
1,751.4
15,555.4
0.0
35,291.2

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Key ratios
(Year-end March)
FY14
Per share data (|)
EPS
16.2
Cash EPS
16.6
BV
75.6
DPS
8.5
Cash Per Share (Incl Invst)
47.1
Operating Ratios (%)
EBITDA Margin
64.4
PBT / Total Op. income
80.6
PAT Margin
54.0
Inventory days
20.9
Debtor days
44.4
Creditor days
41.1
Return Ratios (%)
RoE
21.4
RoCE
25.4
RoIC
68.8
Valuation Ratios (x)
P/E
6.0
EV / EBITDA
2.5
EV / Net Sales
1.7
Market Cap / Sales
3.2
Price to Book Value
1.3
Solvency Ratios
Debt/EBITDA
0.0
Debt / Equity
0.0
Current Ratio
18.2
Quick Ratio
17.7
Source: Company, ICICIdirect.com Research

Page 7

ICICIdirect.com coverage universe (Metals & Mining)

CMP
Company
Coal India
Hindalco Industries
Hindustan Zinc

(|)

EPS (|)

M Cap
TP (|) Rating

P/E (x)

EV/EBITDA (x)

FY15 FY16E FY17E

FY15 FY16E FY17E

FY15 FY16E FY17E FY15 FY16E FY17E

35.8

17.9

13.3

10.9

11.2

9.1

6.9

34.0

(| Cr)

FY15

FY16E

FY17E

29.3

ROCE(%)
41.6

ROE(%)

371

450

Buy

234576

21.7

43.2

37.0

36.8

40.7

96

130

Hold

19803

13.5

9.6

15.2

9.3

13.1

8.3

9.1

8.7

7.0

4.5

5.0

4.9

5.4

2.2

4.9

146

175

Hold

61812

16.3

19.4

18.3

9.0

7.6

8.0

7.1

5.5

6.2

16.5

14.3

11.4

18.5

17.3

14.6

JSW Steel

878

825

Hold

21212

76.3

24.8

58.9

10.7

32.7

13.8

5.6

7.4

6.0

10.3

6.6

8.5

8.0

2.5

5.7

NMDC

100

100

Hold

39591

16.2

10.1

11.0

6.0

9.6

8.8

2.6

4.8

5.3

23.6

12.9

14.1

19.9

12.0

12.4

SAIL

66

60

Hold

27261

5.1

4.8

6.2

13.0

13.6

10.6

11.8

9.7

6.5

4.0

4.4

6.0

4.9

4.5

5.6

114

135

Hold

33757

19.8

16.9

22.6

6.6

7.7

5.8

4.8

5.0

4.4

11.3

10.0

10.7

11.8

10.3

11.1

Tata Steel
240 250 Hold
Source: Company, ICICIdirect.com Research

23314

NM

20.0

23.0

NM

12.0

10.4

7.6

7.9

6.3

5.8

5.3

6.9

0.0

5.6

6.3

Vedanta

ICICI Securities Ltd | Retail Equity Research

Page 8

RATING RATIONALE

ICICIdirect.com endeavours to provide objective opinions and recommendations. ICICIdirect.com assigns

ratings to its stocks according to their notional target price vs. current market price and then categorises them
as Strong Buy, Buy, Hold and Sell. The performance horizon is two years unless specified and the notional
target price is defined as the analysts' valuation for a stock.
Strong Buy: >15%/20% for large caps/midcaps, respectively, with high conviction;
Buy: >10%/15% for large caps/midcaps, respectively;
Hold: Up to +/-10%;
Sell: -10% or more;

Pankaj Pandey

Head Research

pankaj.pandey@icicisecurities.com

ICICIdirect.com Research Desk,

ICICI Securities Limited,
1st Floor, Akruti Trade Centre,
Road No 7, MIDC,
Andheri (East)
Mumbai 400 093
research@icicidirect.com

ICICI Securities Ltd | Retail Equity Research

Page 9

ANALYST CERTIFICATION
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about the subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report.

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ICICI Securities Ltd | Retail Equity Research

Page 10