NMDC Ltd Q4 FY2025 Concall Summary

Key Takeaways

• Record capex deployed, steep FY26 target set: FY25 capex hit an all-time high of INR3,700 crores, and management has set an aspirational production and sales target of 5.5 crore tons for FY26, representing 100% of current EC capacity.
• Steel subsidiaries hit a cash-flow inflection: Both the Nagarnar and NSL steel plants became EBITDA positive on a monthly basis in March and April, marking a critical turnaround after periods of operational struggle and ramp-up.
• Receivables ballooned on two accounts, not systemic risk: A sharp increase in receivables to nearly INR7,800 crores is concentrated entirely with RINL and NSL, with NSL already starting to pay down ~INR100-200 crores monthly and bill discounting recommencing.
• A 10 crore ton ambition is now being built, not just talked about: Management framed FY26 as the first year of a 4-5 year block to double capacity, with capex flows expected to hit an annualized >INR10,000 crores by FY27-28 and most new capacity arriving toward FY29-30.
• What to watch next quarter: Whether Nagarnar’s raw material cost normalizes toward a competitive baseline, the pace of NSL’s outstanding liquidation, and any concrete announcement on overseas mine acquisitions.

Production & Sales: The 10 Crore Ton Pathway

• FY25 resilience: Despite losing 43-44 production days to industrial issues, PAT grew ~19% YoY and PBT grew ~16% YoY, with production only marginally lower by 0.1 crore tons as sales picked up at the end.
• FY26 target is a full-capacity ask: The 5.5 crore ton target for both production and sales requires plants to run at 100-105% of EC capacity; management says sales are not a problem due to expanded dispatch capacity from new sidings and RWLS adding 1.2-1.3 crore tons of headroom.
• April and May tracking on plan: April showed record production and May has been encouraging so far, keeping the company fairly on track up to this point.
• Capacity will arrive in a hop-step-jump: Most of the quantum jump in capacity is slated for FY29-30, not a smooth annual increase, with all projects targeted for completion in the next 3 years.
• EC runway being extended: Total EC stands at ~7.2 crore tons (Bailadila ~5.5-6 crore, Karnataka ~1.7 crore), with an application for ~0.7 crore tons in deposit 4 already heard by the FSC last week and a further 0.2 crore ton extra applied for deposit 5.
• KK line doubling nearly done: Only 20 km remain out of 131 km; Railways has indicated December completion, though management expects it may slip a couple of months but should finish by end of this financial year, removing a key evacuation bottleneck.

Mukherjee: "This is the first year in the block of 4 to 5 years where we plan to take NMDC from 5 crore tons approximately to about 10 crore tons."

Steel Subsidiaries: The Turnaround Story

• Nagarnar dispatch problem solved: The main constraint was evacuation, not production; dispatch jumped from 125,000 tons/month to 230,000 in March and 215,000 in April after deploying 6 LSFTO rigs, with 20 more planned. Production rose from 110,000-120,000 to 180,000-190,000 tons/month.
• Nagarnar cash flow turned positive: Back-of-the-envelope calculations show the plant became EBITDA positive on a monthly basis in March and April, with cash collection rising from ~INR1,000 crores to INR1,400 crores in March and INR1,500 crores in April.
• Nagarnar cost normalization is the next test: Raw material cost as a percentage of sales was 80%+ in Q4, far above private peers at 50-55%, because the plant was in ramp-up phase using 32% lumps instead of 20%. Management says Q1 will be the proper baseline for comparison, but declined to commit that steady-state costs can reach private peer levels.
• Blast furnace performance proven: In April, the furnace ran at over 10,000 tons/day on 5-6 days against a rated capacity of 9,650, hitting 11,000 tons on one day.
• NSL broke even despite a broken granulator: The sinter plant granulator shaft has been broken for 3-4 months, forcing 12% more expensive lumps into the mix, yet NSL broke even on a monthly basis in March and April while touching ~90% capacity utilization. The granulator shaft repair is due by July, with a new shaft by October.
• NSL techno-economics improving with volume: PCI rate rose from 70 to 150 and fuel rate fell from 580 to 530 as utilization increased, though raw material cost remains elevated versus peers due to the granulator issue.
• SAIL marketing arrangement: 60% of Nagarnar sales are routed through SAIL stocking yards under a commercial arrangement whose terms management declined to disclose.

Mukherjee: "Back of the envelope calculation also shows that we have become EBITDA positive on a monthly basis on March and April. So that's a positive thing to have that we are a cash surplus now on a monthly basis in the last 2 months, since the turnaround has happened."

Receivables & NSL Recovery

• Concentration, not contagion: The sharp increase in receivables to almost INR7,800 crores is due to only two accounts: RINL and NSL; NMDC does not sell on credit to anyone else.
• NSL payment cycle restarting: Stagnancy in outstanding has been removed as NSL started paying around INR100-200 crores a month and bill discounting has recommenced; the outstanding is expected to be fully liquidated by end of the year.
• Provision is reversible: An INR50-odd crore provision was taken based on expected credit loss modelling; once amounts are realized, it will be reverted back to income.
• Overall receivables trajectory: Management expects receivables to be a much truncated number by end of this year.

Capex & Financing: Building the Foundation

• FY25 was the peak spend year so far: Capex of INR3,700 crores was the highest ever.
• FY26 is a sanctioning year, not a spending peak: Actual capex is guided at INR4,000-4,200 crores, with most efforts directed at sanctioning works for the larger expansion.
• The real capex wave hits FY27-28: Annualized capex flows are expected to exceed INR10,000 crores by the middle of the next fiscal cycle, as sanctioned projects move into execution.
• Domestic capex to be internally financed for now: Most of the ~INR70,000 crores+ domestic expansion is expected to be internally financed; a decision on leveraging the balance sheet will be taken 1-1.5 years from now, after evaluation of overseas properties is finalized.
• RINL land unlocks three assets: 1,167 acres taken from RINL next to Gangavaram port will host a slurry pipeline termination and 0.8 crore ton pellet plant, a mega blending yard of 2-3 crore tons, and future provision for processing minerals like lithium.

Diversification: Pellets, Pricing & Overseas

• Pellet export is a break-in, not yet a profit driver: Pellet export and coil trading are new verticals that contributed to higher other expenses (~INR250 crores for pellets, ~INR200 crores for NSL marketing tie-up) but minimal profit so far. The real game-changer is expected when full KIOCL capacity of 0.25-0.3 crore tons is reached and DRI-grade pellets are produced.
• High-grade pellet premium expected: Management anticipates a $30-$50 per ton premium for high-grade DRI pellets (66-67 grade).
• Index-based pricing takes first steps: NMDC initiated its first index-based or formula-based pricing last month after 3-4 months of research; the methodology is not yet public and management calls it a learning process, hoping to fine-tune the system over the next 1-2 years to be ready for 10 crore ton sales.
• Overseas mine acquisitions in final evaluation: NMDC is actively evaluating assets across geographies, focusing on 10 minerals (met coal/coking coal, copper, lithium, cobalt, nickel, gold, bauxite), with a portfolio spanning exploration, pre-production, and operational stages. Coking coal targets are mostly stage-3 operational assets, and evaluation of a couple of properties abroad is being finalized.
• Rohne coal block nearing operations: Section 7 and 8 notifications are done, Section 9 is pending with the ministry, and the animal corridor issue has just been settled; coal mining operations should commence in Q3 or Q4 of this financial year, though the washery will take longer.

Mukherjee: "India is -- which imports around 5.5 crore, 6 crore tons is likely to go up to 15 crore to 16 crore tons of import for India in terms of coking coal. So we see a big opportunity there as a miner and as what you call is a company which is on hyper aggressive expansion mode."

Cost Structure & Expense Dynamics

• Q4 employee expense jump is a timing artifact: The jump is due to actual valuation done only in Q4, with no quantum jump on a year-to-year basis.
• Other expenses inflated by new verticals: The jump in other expenses is driven by two new verticals: pellet exports (~INR250 crores) and the marketing tie-up with NSL (~INR200 crores purchase cost). Management indicated these will likely be shown as separate line items next year for clarity.
• NSL raw material cost penalty is temporary: Higher raw material cost versus peers stems from low utilization and the broken granulator forcing 12% more lumps into the mix (lumps are 30% more expensive than fines); both factors are normalizing as volume rises and the granulator is repaired.

Mukherjee: "Despite all this, the fact that we have broken even on a back-of-the-envelope calculation basis, in the month of March, monthly -- on a monthly basis in March and April. And we will do the same in May, is a substantial, substantial achievement for a new steel plant."

Guidance & Commitments

Key Metrics