Stock in Action Today - 03 October 2024

Date: 03 October 2024

Highlights

Stock in Action – Dabur Ltd

Highlights

1. Dabur India share price has witnessed significant volatility after its Q2FY25 business update.

2. The Dabur Ltd Q2 results showed a mid-single-digit revenue decline, which surprised analysts.

3. One major reason why Dabur shares fell is the inventory correction in the general trade channel.

4. Several brokerages have revised their Dabur stock target price due to weak Q2 performance.

5. The Dabur inventory correction has been a strategic move to address high inventory levels in general trade.

6. Analysts are closely monitoring Dabur share performance following the company’s recent downgrades.

7. In light of Dabur stock analysis 2024, brokerages expect a near-term recovery post-Q2 challenges.

8. The FMCG sector stock review highlights Dabur’s struggle with slower demand in its India business.

9. Among the key Dabur revenue decline reasons is the impact of heavy rains and floods affecting out-of-home consumption.

10. Long-term investment in Dabur could still be attractive, given the potential recovery starting from Q3FY25.

Why Dabur is in News?

Dabur India, one of the leading FMCG companies in India, is currently facing market turbulence as its shares plunged by nearly 8% following a weaker-than-expected Q2 FY25 performance. Several brokerages have downgraded their ratings due to inventory corrections and slower demand, leading to a sharp decline in the stock price. The company’s Q2 provisional results revealed a significant decline in consolidated revenue, surprising analysts who had expected a steadier performance amidst rural recovery and better demand. This triggered caution in the market, placing Dabur's stock under pressure in the near term.

Why Dabur Revenue Facing Trouble? 

Dabur's troubles stem from a combination of internal adjustments and external challenges. The company experienced an unexpected inventory correction in its general trade (GT) channel, which has led to a mid-single-digit decline in consolidated revenue for Q2 FY25. Over the last few quarters, Dabur has focused on expanding in modern trade (MT), e-commerce, and quick commerce, which resulted in a higher inventory buildup in GT channels, affecting distributor returns and overall sales. Additionally, heavy rains and floods across various parts of India disrupted out-of-home consumption, particularly in the beverage segment. 

While the international business is performing well with expected double-digit growth in constant currency terms, Dabur's India operations faced setbacks due to weather conditions and inventory adjustments. The company’s management acknowledged that the inventory correction was necessary to improve distributor return on investment (ROI) but remains optimistic about a rebound in growth from October 2024.

What Brokerages Think of Dabur Ltd Share? 

Brokerages have mixed reactions to Dabur's recent performance. Emkay Global downgraded the stock from a ‘Buy’ to an ‘Add’ rating, reducing its target price to ₹650 from ₹750, citing limited upside. Emkay highlighted that the unexpected Q2 inventory correction led to an 8-11% earnings revision for FY25-27. While Emkay had been positive on Dabur’s growth prospects driven by rural recovery and better winter demand, the surprise correction in Q2 raised concerns about near-term growth.

On the other hand, Nuvama Institutional Equities and Antique Stock Broking are more optimistic about a recovery. Nuvama expects a slight improvement in Q3 FY25 but emphasized the need for consistent growth for a stock re-rating. It maintained a target price of ₹760. Antique Stock Broking expects Dabur to recover on the back of strong monsoons and the festive season, maintaining its ‘Buy’ rating with a target price of ₹718. However, Citi issued a 'Sell' recommendation, setting a lower target price of ₹570 due to sluggish demand and weaker-than-expected Q2 results.

Last 1 Year Stock Performance of Dabur Share

Dabur’s stock performance has been mixed over the last year. Despite the recent 8% plunge, the stock has demonstrated resilience over longer time frames. In the past month, Dabur shares have declined by 8.68%, reflecting the impact of weaker Q2 results and downgrades by brokerages. However, over the past six months, Dabur has delivered a strong return of 9.97%, indicating the stock’s upward trend prior to the recent correction.
Year-to-date, Dabur shares have risen by 4.80%, showcasing its positive momentum in FY25. Over the past twelve months, the stock has provided a return of 5.48%, demonstrating sustained growth amidst market challenges. These fluctuations highlight the stock's sensitivity to short-term results but also its potential for long-term gains.

What Long-Term Investors Should Pursue from This?

Long-term investors should consider Dabur’s recent challenges as temporary setbacks rather than indicators of a fundamental weakness in the company. The inventory correction and weather-related disruptions in Q2 FY25 are expected to be short-term issues, with management anticipating a recovery starting from October 2024. Additionally, Dabur’s strong presence in modern trade, e-commerce, and international markets positions it well for future growth.
Investors should monitor how the company addresses channel hygiene issues and improves distributor ROI, as these will be key drivers of growth moving forward. Despite the recent downgrades, several brokerages still maintain ‘Buy’ ratings with a positive outlook for the long term. Dabur's strong brand presence, rural recovery potential, and diversification into new markets like 'Badshah Masala' provide a solid foundation for sustained growth.

Conclusion

While Dabur may face near-term pressure, its long-term growth prospects remain intact, making it a viable option for patient investors looking for stability in the FMCG sector.
 

Date: 01 October 2024

Highlights

Why is Tata Power Share in News?

Tata Power Ltd has recently made headlines with its announcement of massive ₹ 1.2 lakh crore investment plan aimed at transforming Rajasthan into power-surplus state. Investment will span over next 10 years & cover wide range of sectors including renewable energy, power transmission, nuclear energy, electric vehicle (EV) charging infrastructure, & rooftop solar installations. This ambitious move is part of Tata Power's broader strategy to accelerate India's clean energy transition & support sustainable industrial growth. Memorandum of Understanding (MoU) with Rajasthan government will play pivotal role in strengthening company's renewable energy portfolio & enhancing shareholder value.

Tata Power’s Mega Project with Rajasthan

Tata Power has inked MoU with Rajasthan government to invest ₹ 1.2 lakh crore over next decade in bid to make state power-surplus. This investment focuses heavily on renewable energy projects, with ₹ 75,000 crore earmarked for green energy. Projects include solar, wind, hybrid energy, & advanced battery energy storage systems (BESS). Company also plans to install 1 lakh rooftop solar systems under PM Surya Ghar Yojana & establish 2 GW solar module manufacturing facility in Jodhpur with investment of ₹ 2,000 crore. In transmission & distribution space, Tata Power will invest ₹ 20,000 crore to modernize state's grid infrastructure, reduce energy losses, & improve overall power quality. Additionally, ₹ 1,000 crore will be directed toward setting up 100,000 EV charging points, marking significant step in expanding India's electric mobility infrastructure.
The company is also exploring opportunities to venture into nuclear power, with ₹ 10,000 crore investment planned for transmission systems & potential nuclear projects. These efforts align with India's goals of achieving carbon neutrality & ensuring energy security.

Job Creation & Shareholder Value

Tata Power share is gaining attention due to its ambitious 10-year renewable energy project in Rajasthan. Tata Power's investment plan is set to have profound socio-economic impact on Rajasthan. Company estimates that its projects will generate over 28,000 direct jobs in state. This employment boost will not only support local economy but also foster growth of industries tied to solar manufacturing, infrastructure development, & renewable energy innovations.
For shareholders, this large-scale investment is positive signal of long-term value creation. Tata Power's focus on renewable energy aligns with global trends toward clean energy, making company attractive prospect for investors seeking exposure to sustainable growth sectors. By expanding its renewable energy capacity by 10 GW (6 GW solar & 4 GW hybrid) across key locations such as Bikaner, Jaisalmer, Barmer, & Jodhpur, Tata Power is positioning itself as a leader in India's green energy transition.

The company's efforts to modernize grid & integrate renewable energy at scale will reduce energy costs for both industries & consumers, enhancing Rajasthan's appeal as destination for green investments. Lower energy costs & creation of reliable 24/7 power supply will provide competitive edge for local industries & bolster Tata Power's financial performance, benefiting long-term investors.

Long-Term Investor Outlook

Tata Power’s massive investment in Rajasthan's power infrastructure offers promising opportunity for long-term investors. 10-year plan not only emphasizes sustainable growth but also ensures diversification across various segments like renewable energy, EV infrastructure, & nuclear power. These initiatives are in line with global trends favoring green energy investments, positioning Tata Power as key player in future of energy.
Moreover, company's move to expand its solar & hybrid energy capacity, coupled with efforts to modernize grid infrastructure, signals strong revenue growth potential. Tata Power's ability to stay ahead in clean energy market, while reducing operational costs & improving efficiency, presents robust case for investors looking for stable, long-term returns. expected job creation & socio-economic impact further strengthen narrative that Tata Power's initiatives are aligned with national & global focus on sustainable development.

Conclusion

Tata Power's ₹ 1.2 lakh crore investment in Rajasthan marks significant step in India's renewable energy journey. With comprehensive plan covering renewable energy generation, grid modernization, nuclear energy exploration, & EV charging infrastructure, Tata Power is setting stage for long-term growth & value creation. project not only supports Rajasthan’s transformation into power-surplus state but also positions Tata Power as leader in India's clean energy transition. For shareholders & long-term investors, this ambitious plan presents solid opportunity to capitalize on growing demand for sustainable energy solutions while contributing to India's energy independence & environmental goals.
 

Date: 30 September 2024

Highlights

Why Reliance Power Share is in News?

Reliance Power has been making headlines recently due to its efforts to resolve massive debts & ongoing financial restructuring. Rpower's stock has seen significant fluctuations as it grapples with regulatory challenges & operational hurdles. With Anil Ambani aiming for debt-free status for his companies, Reliance Power has been under scrutiny from investors & market analysts alike. These developments have sparked renewed interest in company's shares, prompting many to question its future potential & long-term viability.

Last 1 Year Performance of Reliance Power Share

Over past year, Reliance Power share price has experienced volatile movements. At beginning of year, stock was trading at relatively low levels, reflecting market's cautious stance on company’s financial health. However, as news of debt restructuring & fresh capital infusion started circulating, stock saw brief rally. Despite uptick, concerns around cash flow issues & company's heavy debt load kept stock price fluctuating. By end of year, stock performance remained lackluster, with only marginal gains for long-term investors. 

Anil Ambani’s Journey to Debt-Free Status

Anil Ambani's journey to make Reliance Power debt-free has been anything but smooth. Following collapse of his once-thriving empire, Ambani has been working aggressively to pay off debts across his group companies. Financial troubles started when various Reliance Group companies began defaulting on loans, triggering liquidity crisis. Ambani’s strategy has involved selling assets, restructuring debt, & seeking new investors. Announcement that Reliance Power aims to be debt-free has been welcomed by market, but skeptics still question whether company can execute its plans successfully, given its operational challenges.

Recent Developments & Obligations Resolution

In recent months, Reliance Power has made strides toward settling its financial obligations. company secured approvals to restructure its debt & announced plans to raise fresh capital through equity & debt instruments. key milestone was successful sale of certain assets, helping reduce overall debt burden. Additionally, company's focus on renewable energy sector has been highlighted as new growth avenue. However, execution of these plans is still work in progress, & market participants are waiting to see whether these moves will significantly impact company's financial stability.

What are Regulatory Challenges for Reliance Power?

Reliance Power has faced several regulatory hurdles, particularly concerning its coal-fired power plants & environmental clearances. Shift in policy toward renewable energy sources & Indian government's increased focus on reducing carbon emissions have posed challenges for company's thermal power business. Furthermore, delays in obtaining permissions & adhering to regulatory norms have affected its operations & financial planning. Recent push for cleaner energy has forced Reliance Power to recalibrate its business strategy, aligning more closely with renewable energy projects to stay compliant & relevant in energy sector.

 Where will Funds Be Utilized?

The funds raised by Reliance Power through various means, including asset sales & equity offerings, are expected to be directed towards debt repayment & development of renewable energy projects. Significant portion of capital will also go towards completing pending projects & upgrading existing infrastructure. Company has indicated its commitment to expanding its presence in renewable energy sector, particularly in solar & wind energy, to capitalize on government incentives & growing demand for cleaner energy sources.

Overview of Brokers About Reliance Power

Brokers have mixed views on Reliance Power’s future prospects. Some see potential in company’s shift toward renewable energy & its efforts to become debt-free, viewing it as sign of financial prudence & long-term sustainability. However, others remain cautious, citing company’s past struggles with debt, regulatory challenges, & operational inefficiencies. Consensus among most brokers is to adopt "wait-and-watch" approach, as company’s turnaround efforts are still in early stages, & actual outcomes remain uncertain.

What Long-Term Investors Could Do?

For long-term investors, Reliance Power presents high-risk, high-reward scenario. On one hand, company’s aggressive push towards reducing debt & its renewed focus on renewable energy could offer significant growth opportunities. On other hand, company's financial health remains fragile, & any missteps in its restructuring plan could negatively impact its stock performance. Long-term investors should closely monitor company’s debt-reduction progress, regulatory developments, & execution of its renewable energy projects before making investment decisions. Cautious approach is advisable until company demonstrates sustained financial stability.
 

Date: 27 September 2024

Highlights

Why Sugar Stocks & Balrampur Chini Mill Share is in News? 

In recent weeks, sugar stocks such as Shree Renuka Sugars & Balrampur Chini Mills have experienced significant upward momentum. This rally has largely been driven by government actions & market conditions favouring sugar industry, particularly relating to ethanol production & sugar pricing. With both companies witnessing gains of over 7.5% on September 27, 2024, this blog takes deep dive into factors that have contributed to this growth. We will explore how government decisions, sugar production forecasts, & broader market trends are affecting these stocks & what future holds for industry.

Government Support for Sugar Industry: Ethanol Price & MSP Revision 

Ethanol Blending Program: Green Energy Initiative
One of primary drivers behind sugar stock rally is Indian government's focus on increasing ethanol production. Ethanol blending program aims to reduce India’s dependence on oil imports while fostering cleaner energy consumption. Ethanol, by-product of sugarcane, is used as biofuel that can be blended with petrol, reducing overall carbon emissions. Program has gained traction, with government setting ambitious targets to blend up to 20% ethanol in petrol by 2025.

This policy directly benefits sugar mills, as ethanol production provides additional revenue stream apart from sugar sales. Currently, ethanol prices are fixed by government, & industry has been lobbying for increase. Since ethanol prices have remained unchanged since 2022-23 supply year, market was abuzz when Food Minister, Pralhad Joshi, hinted that government was considering revising ethanol prices for 2024-25 season.

Revision of Minimum Selling Price (MSP) of Sugar
Another key factor contributing to rally in sugar stocks is government’s potential decision to revise Minimum Selling Price (MSP) of sugar. MSP has been static at ₹31 per kg since 2019. Industry players have been requesting increase in MSP to cope with rising costs & reduce financial pressures, which would ultimately improve profitability. Government’s consideration of this request is positive sign for sugar companies, as MSP hike would increase their bottom line.
Sugar mills, especially those like Shree Renuka Sugars & Balrampur Chini Mills, which are heavily reliant on domestic sugar sales, stand to benefit significantly from this move. Additionally, with government striving to balance farmer benefits with industry profitability, this revision could be major boost for entire sugar sector.

Market Response to Government’s Announcements
When news of government’s intentions to revise ethanol prices & sugar MSP broke on September 27, 2024, there was immediate positive response in stock market. Shares of Shree Renuka Sugars surged by over 7%, while Balrampur Chini Mills & other major sugar stocks followed suit with similar gains. This rally can be attributed to investor optimism surrounding profitability of sugar companies in light of potential government support.
Prospect of increased ethanol prices, coupled with possible hike in MSP of sugar, reduces financial strain on sugar companies, making them more attractive investments. Investors foresee improvement in profit margins for these companies, as they will likely be able to sell both ethanol & sugar at higher prices in near future. Additionally, these moves are seen as steps towards stabilizing sector, which has historically been prone to volatility due to fluctuating prices & erratic government policies.

Strong Sugar Production Forecast for 2024-25 

Monsoon Impact on Sugarcane Yield
One of underlying factors behind rally in sugar stocks is strong outlook for sugar production in 2024-25 season. Indian Meteorological Department (IMD) has forecasted normal monsoon, which is expected to result in higher sugarcane yields. Favorable weather conditions are crucial for sugarcane cultivation, & good monsoon ensures better crop quality & quantity.

Increased sugar production translates to better raw material availability for sugar mills, allowing them to meet both domestic & export demands. With prospect of bumper crop, sugar companies like Shree Renuka Sugars & Balrampur Chini Mills are well-positioned to capitalize on this opportunity. Additionally, higher sugar production can support ethanol production, as sugar mills divert portion of their cane output towards ethanol manufacturing, further improving profitability.

Export Policy & International Demand
India is one of largest exporters of sugar in world, & global demand for sugar continues to remain strong. While domestic market for sugar is largely stable, international demand, particularly from countries with insufficient domestic production, provides lucrative market for Indian sugar mills.
Indian government is also expected to announce its sugar export policy for 2024-25 season. policy will determine export quota for sugar mills & favorable export policy could further boost financial performance of sugar companies. Investors are anticipating that robust export quota, combined with increased domestic production, will result in strong financial results for leading sugar mills in India.

Profitability & Financial Performance of Shree Renuka Sugars & Balrampur Chini Mills

Shree Renuka Sugars: Leading Ethanol Charge
Shree Renuka Sugars has been key player in Indian sugar industry, with strong focus on ethanol production. Company has invested significantly in expanding its ethanol manufacturing capacity, & with government's ethanol blending targets in place, Shree Renuka Sugars is poised to benefit from rising demand for ethanol.
Company’s financials have shown steady improvement over past few quarters, with revenues from ethanol production contributing larger share of its total income. With potential increase in ethanol prices for 2024-25 season, Shree Renuka Sugars is expected to see further improvement in its profit margins. Recent rally in its stock price reflects investor confidence in company’s ability to capitalize on favorable market conditions.

Balrampur Chini Mills: Balanced Portfolio
Balrampur Chini Mills, another major player in sugar industry, has more balanced portfolio, with significant revenues coming from both sugar & ethanol productions. Company has consistently delivered strong financial performance, supported by its efficient operations & strategic focus on ethanol.
With anticipated revision of sugar MSP & ethanol prices, Balrampur Chini Mills is expected to see boost in profitability. Company’s strong balance sheet & focus on operational efficiency make it attractive investment for those looking to gain exposure to sugar sector.

Road Ahead for Sugar Stocks
Recent rally in sugar stocks, led by Shree Renuka Sugars & Balrampur Chini Mills, is testament to positive developments in industry. With government taking steps to support sugar prices & ethanol production, coupled with strong production outlook, sugar sector is poised for period of sustained growth. However, investors should remain cautious, as sugar industry has historically been subject to volatility due to policy changes & fluctuations in global demand. While current outlook is optimistic, long-term investors should keep eye on how government policies evolve & global market dynamics play out.

Conclusion

For now, sugar industry presents compelling investment opportunity, & companies like Shree Renuka Sugars & Balrampur Chini Mills are well-positioned to capitalize on favourable market conditions. As sector continues to benefit from government support & strong production outlook, sugar stocks could remain in focus for investors in coming months.
 

Date: 26 September 2024

Highlights

1. Maruti Suzuki’s share price has gained over 28.66% year to date in 2024 including today’s gain.

2. Maruti Suzuki’s financial performance has grown over the past years with operating profit increasing from ₹5,411 crore in March 2021 to ₹18,626 crore in March 2024.

3. Maruti Suzuki’s quarterly earnings report highlighted a continuous growth in net profit in the last 4 quarters.

4. For Maruti Suzuki’s stock analyst forecasts positive trends for the future.

5. Maruti Suzuki’s share price increased from ₹12,100 to ₹13,264 in September and the technical chart shows the stock is nearing its all time high. Investors could see further profits if the price sustains above this level.

6. Maruti Suzuki stock has underperformed the Nifty, delivering 25.32% returns in the last year, compared to the Nifty's 32.55% return over the same period.

7. Maruti Suzuki is currently trading at ₹13,45 showing a 3.48% increase as of 11:38 am on NSE.

8. Maruti Suzuki is gaining momentum after receiving positive commentary from Motilal Oswal, which has issued a buy call on the stock with a target price of ₹14,700.

9. The stock is currently trading near its 50-day moving average (₹12,409.71) and above its 200 day moving average (₹11,860.85) suggesting a bullish trend in the medium term.

10. As per the June quarter filings the company has a 58.19% promoter holding, 19.37% DII holding and 18.98% foreign institutional investor (FII) holding.

Maruti Suzuki Share Performance

Maruti Suzuki's share price has surged by 4% and is currently trading at ₹13,247.5. At the same time BSE AUTO index has risen by 0.5% now at 60,881.3. Among today's top gainers in BSE AUTO index are Tata Motors up 2.2% and Eicher Motors up 1.1%. However, Hero Motocorp and Escorts are down 1.9% and 1.5% respectively.

Maruti Suzuki's share price in the past year has increased from ₹10,586.3 to ₹13,247.5 a 25.1% gain. Meanwhile BSE AUTO index has jumped 65.6% rising from 36,764.0 to 60,881.3. During this period, the top performers in BSE AUTO index were Bajaj Auto (up 150.4%), Cummins India (up 116.9%) and Motherson Sumi (up 113.4%).

Maruti Suzuki Financial

Maruti Suzuki's net profit increased by 49.2% YoY to ₹37,021 million for the quarter ending June 2024 up from ₹24,807 million in the same period last year. Net sales also grew by 10%, reaching ₹357,794 million compared to ₹325,348 million in April-June 2023.

For the full year ending March 2024, Maruti Suzuki's net profit rose by 63.2% to ₹134,882 million compared to ₹82,637 million in FY23. The company's revenue increased by 19.8%, reaching ₹1,418,582 million in FY24. Based on its earnings over the past 12 months, Maruti Suzuki's current price to earnings ratio is 28.9.

Conclusion

Maruti Suzuki has shown strong financial growth in 2024 with a 49.2% increase in quarterly net profit and 63.2% rise in annual net profit. Its stock price has gained 28.66% year to date, although it has underperformed the Nifty over the past year. The company’s share price is nearing an all time high  supported by positive market sentiment and technical indicators. With solid promoter holding and analyst buy recommendations, Maruti Suzuki is positioned for continued upward momentum especially if it sustains above key price levels. However, it still faces competition within the BSE Auto index.
 

Date: 25 September 2024

Highlights

1. Powergrid’s share price has gained over 51.54% year to date in 2024 including today’s gain.

2. Powergrid’s financial performance has grown over the past years with operating profit increasing from ₹34,906 crore in March 2021 to ₹39,826 crore in March 2024.

3. Powergrid’s quarterly earnings report highlighted a continuous improvement in net profit in the last 4 quarters.

4. For Powergrid’s stock analyst forecasts positive trends for the future.

5. Powergrid’s share price increased from ₹323 to ₹366 in September, and the technical chart shows the stock is nearing its all time high. Investors could see further profits if the price is above this level.

6. Powergrid stock has outperformed the market delivering over 81.52% returns in the last year.

7. Powergrid is currently trading at ₹361 showing a 3.14% increase as of 12:08 am on NSE.

8. Powergrid is gaining momentum after receiving positive commentary from Goldman Sachs, which has issued a buy call on the stock with a target price of ₹370.

9. Motilal Oswal Financial Services Ltd. says the Indian power sector could attract an investment of ₹40 lakh crore over the next decade. They have started coverage of the sector, giving Power Grid a buy rating.

10. As per the June quarter filings the company has a 51.34% promoter holding, 16.32% DII holding and 28.73% foreign institutional investor (FII) holding.

Why is Powergrid Share in News?

Power Grid Corporation of India’s share price rose after the company received a Letter of Intent or LoI to set up an inter state transmission system. They won a tariff based competitive bid to install dynamic reactive compensation systems (STATCOMs) at two pooling stations in Gujarat (KPS1 and KPS3) on a build, own, operate and transfer (BOOT) basis.

The project also includes setting up a new 765/400/220kV substation near South Olpad, along with transmission lines and bay extension work at other existing substations in Gujarat. Additionally, Power Grid has been selected to establish a similar transmission system at Kurawar in Madhya Pradesh.

The company also won a competitive bid to increase the transformation capacity at Jam Khambhaliya substation in Gujarat.

Brokerage house commentary

Global brokerage firm Jefferies maintained its buy rating on Power Grid and set a target price of ₹390 for the stock. On BSE, Power Grid’s shares surged by 4.5% reaching a new all time high of ₹366.20. This increase followed another boost from Goldman Sachs which showed confidence in the stock by also giving it a buy rating and a slightly lower target price of ₹370. Both brokerage firms see strong potential for further gains.

Motilal Oswal Financial Services predicts that the Indian power sector could attract investments of ₹40 lakh crore over the next decade. The brokerage has given a buy rating to Power Grid Corp., Tata Power and JSW Energy while it has a neutral rating on NTPC and Indian Energy Exchange. Motilal Oswal expects Power Grid, JSW Energy and Tata Power to see share price increases of 24%, 15.8% and 16.7%, respectively.

They also estimate that most of the investment will go towards power generation (86%), followed by transmission (10%) and smart metering (4%).

Conclusion

Power Grid Corporation of India has seen growth in 2024, with its share price rising over 51.54% year to date and outperforming the market with an 81.52% return in the past year. The company’s strong financial performance and positive analyst outlook combined with major project wins have fueled its momentum. Recent gains were supported by positive commentary from brokerage firms like Jefferies and Goldman Sachs both maintaining a buy rating with target prices of ₹390 and ₹370 respectively. Additionally the Indian power sector is expected to see ₹40 lakh crore in investments over the next decade boosting Power Grid’s future prospects.
 

Date: 24 September 2024

Highlights

1. NMDC's share price has gained over 5% year to date in 2024 including today’s gain.

2. NMDC's financial performance has grown over the past year with operating profit increasing from ₹6,054 crore in March 2023 to ₹7,294 crore in March 2024.

3. NMDC's quarterly earnings report highlighted a continuous improvement in net profit in the last 4 quarters.

4. For NMDC's stock analyst forecasts positive trends for the future.

5. NMDC's share price increased from ₹210 to ₹223 between August and September and the technical chart shows the stock consolidating near ₹210.

6. NMDC stock has outperformed the market delivering over 55.70% returns in the last year.

7. NMDC is currently trading at ₹223 showing a 3.45% increase as of 11:39 am on NSE.

8. NMDC is gaining momentum after receiving positive commentary from Motilal Oswal, which has issued a buy call on the stock with a target price of ₹280.

9. NMDC plans to invest ₹2,200 crore in FY25 to build a slurry pipeline and set up new processing plants.

10. As per the June quarter filings the company has a 60.79% promoter holding, 14.31% DII holding and 12.76% foreign institutional investor (FII) holding.

Why is NMDC Share in News? 

Nifty Metal index reached a nearly two month high on Tuesday as investors showed more interest in metal stocks after China’s central bank introduced measures to boost its economy. Total market value of metal companies increased by ₹36,168.53 crore, reaching ₹17.94 lakh crore by 10:40 a.m.

China’s People's Bank reduced the reserve requirement for banks by 50 basis points and lowered a key interest rate to 1.5% from 1.7%. This is expected to help Chinese banks lend more, supporting investments in sectors like infrastructure and manufacturing which consume metals. As a result, Chinese demand for metals in global markets could increase boosting metal prices.

Nifty Metal index rose 2.68% to 9,707.90 its highest level since 1 August. It marked a three day winning streak trading 2.44% higher at 9,685.55 by 10:41 am compared to a 0.10% rise in the Nifty 50. Tata Steel and Vedanta were the biggest contributors to the gains while National Aluminum saw the highest jump with a 5.69% gain trading at ₹188.70 per share at 10:42 am.

NMDC Capex Plan

State owned miner NMDC plans to invest ₹2,200 crore in FY25 to build a slurry pipeline and new processing plants. This investment is part of the company’s goal to increase its production to 100 million tonnes by 2030. Last year, NMDC produced a record 45 million tonnes of iron ore.

The company which operates under the Union Steel Ministry is also set to start production at an 8 million tonne coking coal block by FY26 aiming to reduce India’s reliance on coking coal imports. NMDC is also looking into mining opportunities for essential minerals such as lithium, cobalt, and nickel, with a special emphasis on lithium mining in Australia through its subsidiary, Legacy India Iron Ore.

Part of the ₹2,200 crore investment includes the development of a 135 km eco-friendly slurry pipeline connecting Bacheli and Nagarnar. This pipeline will lower the dependence on traditional, carbon-heavy transportation methods. Additionally, the new screening plants at the Kirandul and Donimalai mines will enable the company to handle increased production while maintaining high-quality standards.

NMDC aims to increase its domestic iron ore market share to 25% from the current 20% by reaching its 100 million tonne target. To support this the company is expanding rail transport capacity, developing a 4 million tonne beneficiation plant at Bacheli and building a 2 million tonne pellet plant at Nagarnar with plans to expand it to 6 million tonnes.

The company is also focusing on blending low grade and high grade ore efficiently using leftover materials and testing new methods to upgrade low grade ore at its R&D center. NMDC plans to roll out advanced fleet management systems across all its mines to support these efforts.

Driven by increasing demand for iron ore both domestically and internationally, NMDC’s expansion focuses on increasing production and improving infrastructure including slurry pipelines, pellet and beneficiation plants and stockyards.

Conclusion

Motilal Oswal Financial Services has given a buy recommendation for NMDC with a target price of ₹280. The current price of NMDC Ltd. shares is ₹223. Founded in 1958, NMDC is a large company in the mining sector, with a market value of ₹65,514 crore. Its main products and revenue sources include iron ore, pellets, services, power and other related activities.