NMDC Steel shares took a hit on the BSE, dropping 5% in intraday trading and reaching a low of ₹43.86 per share. The stock saw selling pressure due to the company's loss widening in the second quarter of FY25. NMDC Steel reported a net loss of ₹595.37 crore for the September quarter (Q2FY25), a significant increase from the ₹131.10 crore loss reported a year ago. This performance has impacted investor confidence in the company’s share market investment prospects.
Around 12:21 PM, NMDC Steel shares were trading down by 4.59%, at ₹44.09 per share on the BSE, while the BSE Sensex was down by 0.67% at 78,149.37. NMDC Steel's market capitalisation currently stands at ₹12,950.35 crore. The stock's 52-week range has varied from a high of ₹73.67 to a low of ₹41.4, reflecting fluctuations influenced by both market conditions and company performance.
Revenue surges, but profitability lags
Despite the expanded loss, NMDC Steel saw an impressive increase in revenue from operations. Revenue soared by 448.8%, reaching ₹1,522 crore in Q2FY25 compared to ₹277 crore in the same quarter last year.
However, this revenue growth has yet to translate into positive profitability, as the company’s Earnings before Interest, Tax, Depreciation, and Amortisation (EBITDA) stood at ₹441 crore in Q2, down from ₹72 crore a year ago. The EBITDA margin for the quarter remained negative at -28.9%, compared to -26% in the previous year, adding a challenge for shareholders interested in long-term share market investment in the steel sector.
NMDC Steel: India’s newest steel producer
NMDC Steel, demerged from NMDC in 2021, operates as an independent entity with a focus on high-quality steel production. The company runs the Nagarnar Steel Plant in Chhattisgarh, India's youngest steel unit, built with an investment of approximately ₹23,000 crore. The plant, which has a capacity of 3 million tonnes, began commercial operations on August 31, 2023, marking a milestone in NMDC Steel’s journey in the industry. Following the demerger, NMDC Steel gained its own management and financial structure, aiming to grow its footprint in the Indian steel market and attract investors considering share market investment in this sector.
One-year performance underperforms Sensex
Over the past year, NMDC Steel’s share price has fallen by 8.7%, in contrast to the Sensex's gain of 21%. The stock’s underperformance compared to the broader market reflects both sector-specific challenges and the company’s internal financial hurdles.
As the company continues its strategic focus on building a competitive edge in steel production, potential investors will be closely monitoring any signs of profitability and stability in the company's operations as they weigh their share market investment options.
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