This Iron Ore Company Delivers the Goods

Record production, record sales volumes, coal mining commenced, capacity heading to 100 mtpa by FY31 

India’s largest iron ore producer does not often generate excitement. NMDC is a PSU miner — methodical, capital-intensive and slow-moving by the standards of the broader market. But the fourth quarter of FY26 was, by the company’s own historical standards, exceptional. Iron ore sales volume hit a record high for any fourth quarter. Production hit its highest-ever fourth quarter figure. Revenue grew over 60% year-on-year. And quietly, almost without fanfare, NMDC commenced coal mining from its Tokisud North thermal coal block — the first step in a diversification that could meaningfully change the long-term revenue profile.

The Volume Record 

NMDC achieved iron ore sales of approximately 15.3 million tonnes in Q4FY26 — up 20.8% year-on-year and 20.5% sequentially. Production reached approximately 16.3 million tonnes — up 22.3% year-on-year. These are not incremental improvements; they are step-changes in operational throughput that reflect the fruition of capacity investments made over several years. For the full year FY26, iron ore production came in at approximately 53.2 million tonnes. Management is now targeting 60 million tonnes in FY27 — an ambitious but credible target given the infrastructure coming onstream.

Revenue grew 60.7% year-on-year and 49.3% sequentially to Rs 111.7 billion — aided not just by iron ore volumes but also by trading sales from NMDC Steel. EBITDA grew 29.1% year-on-year to Rs 26.4 billion. EBITDA per tonne came in at Rs 1,728 — up 6.9% year-on-year — a measure of the underlying productivity improvement in the mining operations.

The Infrastructure 

Getting ore out of the ground is only half the challenge in mining — getting it to customers is the other half. NMDC is addressing the evacuation bottleneck on multiple fronts simultaneously. Phase 1 of the slurry pipeline project — which includes a 2 mtpa ore processing plant at Bacheli, a 15 mtpa slurry pipeline from Bacheli to Nagarnar, and a 2 mtpa pellet plant at Nagarnar — is expected to be completed in Q1FY27, with pre-commissioning trials already underway. The doubling of the 131 kilometre rail line from Kirandul to Jagdalpur is expected by Q3FY27, raising evacuation capacity from the Bailadila sector mines from 29 mtpa to 40 mtpa.

Together, these two projects remove the infrastructure constraints that have historically limited NMDC’s ability to convert its geological resource into revenue. Incremental production from existing mines and new blocks — including Deposit 4 and Deposit 13 at Bailadila — provide the volume. The slurry pipeline and rail line provide the evacuation. The 60 MT FY27 target is built on both.

Coal Mining 

The most strategically significant development in NMDC’s fourth quarter results is one that contributes almost nothing to current earnings. The Tokisud North thermal coal block — with a capacity of 2.3 mtpa — commenced operations in January 2026, an opencast mine that management expects to produce approximately 1 million tonnes in FY27. The Rohne coking coal block, with a capacity of 8 mtpa, is expected to commence mining in FY27, targeting 2 million tonnes of production in FY28.

For a company whose entire revenue base has historically been iron ore, coal mining represents genuine diversification. Antique factors in revenue from expected coal sales in its revised estimates — contributing to the 11.6% upward revision in FY28 EBITDA estimates despite a marginal reduction in iron ore realisation assumptions and higher cost inputs. The long-term target of deriving 10-15% of revenue from non-iron ore segments — including gold, magnetite and lithium mining prospects in Australia — paints a picture of NMDC as a diversified mining company rather than a single-commodity miner.

Realisations Are Moving 

Iron ore realisation came in at Rs 4,873 per tonne in Q4 — 2.8% lower year-on-year but 2.8% higher sequentially, reflecting the price hikes of approximately Rs 100 per tonne in February and Rs 50 per tonne in March 2026. In April, Bailadila lumps and fines were hiked by Rs 500 per tonne and Rs 450 per tonne respectively, followed by a further Rs 200 per tonne increase in May. Spot international iron ore fines prices are currently running 2% above the Q4 average. Management has guided for realisations to stabilise at current levels — which, given the sequential improvement trajectory, is a constructive starting point for FY27.

The Balance Sheet Is a Feature, Not a Footnote

NMDC ended FY26 with a net cash balance of approximately Rs 49.2 billion — a position that management says is sufficient to fund the substantial capex programme through internal accruals alone. FY27 capex is guided at Rs 60 billion, stepping up to Rs 70-100 billion annually over FY28-30 as the company pushes toward 100 mtpa capacity by FY31. The ability to fund this entirely without equity dilution or significant debt is a meaningful differentiator in a capital-intensive sector.

The dividend yield adds another dimension. NMDC declared a final dividend of Rs 1 per share for FY26, and Antique expects the dividend yield to sustain at approximately 4.3% over FY27-28. For a stock trading at Rs 93, a 4.3% yield while the company simultaneously invests in transformational capacity expansion is a combination that is rarely available in mining stocks.

Scorecard

The target price revision from Rs 95 to Rs 99 reflects the higher FY28 EBITDA estimate, partially offset by a marginally lower iron ore realisation assumption and higher cost factoring, as per Antique. At 6x FY28 EV/EBITDA, the valuation is undemanding for a business with visible volume growth, improving realisations, coal diversification underway and a net cash balance sheet.