NMDC

NMDC posted a set of dismal numbers for Q2FY14. Despite an increase in sales volumes, lower sales realization pushed down the net profit of the company to Rs.1318 crore, down 21% (YoY). Its average realization was down 15% in Q2. Turnover was down 5% at Rs.2480 crore. Operating margins stood at 60.3% vs 74% (YoY). NMDC produced 5.94 million tonnes (MT) of iron ore while the volume of sales was 6.5 MT, which is 11% higher than the corresponding quarter last fiscal. The company has set a sales target of about 30 MT of iron ore in the current fiscal. Sales in the first half were 13.76 MT.

For the first time in one year, in this month, the company has hiked prices of lumps and fines of iron ore by Rs,100/tonne and hopefully, this will help shore up some of its earnings in Q3. Despite the slump in the performance, the company has been generous and declared a 300% interim dividend and this has been at the behest of the Govt, which has urged cash-rich companies to increase their dividend payouts. Despite the poor Q2 numbers, majority of the brokerage houses have upped their weightage on the stock as they expect higher realizations due to price hike to better the earnings in the coming months.