State-owned miner NMDC has reported a drop in net profit for the April-June period (first quarter) by 18 per cent.
“Lower average sales realisation was the key reason for the decrease in net profit,” Chairman C.S. Verma told reporters. However, he said that in spite of the challenges and downtrend in the steel sector, the company’s performance in the first quarter was appreciable, considering its focus was to support the domestic steel industry.
The company recorded a net profit of Rs 1,572 crore in the first quarter against Rs 1,906 crore during the April-June quarter of 2012-13. The turnover was almost flat at Rs 2,871 crore against Rs 2,840 crore.
However, the performance was better than expected. This was evident in NMDC’s stock prices, which rose over five per cent to close at Rs 99.95 on Wednesday, after touching a 52-week low on Tuesday. The market is optimistic about the stock. “We maintain our buy rating on the stock but keep our target price under review,” said Bhavesh Chauhan, senior research analyst (Metals & Mining) of Angel Broking.
Reflecting the trend in overall iron ore market, the average sales realisation price came down to Rs 3,907 a tonne from Rs 4,081 crore in the first quarter. The company produced 6.92 million tonnes (mt) of ore during the first quarter, which was almost flat. Sales rose by six per cent to 7.25 mt.
Price of ore, fines
The company has decided to reduce the price of iron ore lumps by Rs 200 a tonne for August and kept the price of fines unchanged amid subdued demand during the monsoon season. Iron ore lumps will now be available at Rs 4,300 a tonne and fines at Rs 2,510 a tonne.
Iron ore lumps are of a higher grade, with ferrous content of 63-65 per cent. Fines are of lower grade, with ferrous content of less than 60 per cent.