Investing.com — NMDC is India’s largest producer of iron ore. The last month and a half have been good for the company with multiple growth triggers falling in place. First up, there’s a shortage of iron ore in domestic markets. This shortage us due to a sudden spike in iron ore prices in China after China Iron & Steel Association, the leading industry body in China, asked regulators to crack down on potential illegal activity.
Second, NMDC (NS:) has arrived at a resolution with Karnataka on the Donimalai mine that was shut for two years. The mine has a capacity of around seven million tonnes per annum and NMDC should soon start mining here.
Prabhudas Liladher has upgraded the stock from ‘accumulate’ to ‘buy’ as the brokerage believes that the shortage in the domestic market and a firm outlook on global prices will help NMDC execute higher profits. NMDC has increased prices by Rs 2,250 per tonne in the last five years, and they are still at a discount to international prices. It leaves NMDC plenty of room to negotiate prices. Motilal Oswal (NS:) also recommends a buy on the stock.
The stock is currently trading at Rs 115.1, up almost 37% from Rs 84.15 on November 2.