GMDC Share: There is movement in the shares of Gujarat Mineral Development Corporation (GMDC) Limited today. The stock is trading at the level of Rs 541.55 after falling 4 percent. The reason for the decline in shares is the rating given to it by a global brokerage firm.
Why did Nuvama reduce its rating?
In fact, Nuvama has maintained its ‘Reduce’ rating on state-owned mining company GMDC Limited and has given it a target price of Rs 231, which indicates a possible downside of 59 percent from its closing price on Monday. Additionally, Nuvama has cut GMDC’s EBITDA estimates for 2026 and 2027 by 10 percent and 15 percent, respectively. The reason behind this has been said to be low volume and high cost of lignite.
September quarter results
If we exclude the lump sum profit, the company remained in loss in the September quarter. Its revenue has also declined by 11 percent in this quarter compared to last year, while EBITDA has halved. EBITDA margin has also declined to 13.2 percent from 24 percent in the same quarter a year ago.
This thermal power plant of the company became operational in this September quarter and it will achieve its full capacity by the fourth quarter of the current financial year. Due to this, GMDC’s lignite volume may increase by 26 percent in 2027, which will also be helped by the expansion of Bhavnagar mine. Lignite is a category of coal, which is generally used for steel industry and power plants.
Nuvama believes that any potential earnings from rare earths will be possible only after the year 2030. The brokerage said, we have included the benefits from lignite, coal and electricity in our estimates. It further said, the current valuation of GMDC based on the estimated EBITDA for 2027 and 2028 would be 19 times and 15 times respectively.
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