NMDC Steel Limited

Basic Materials — Steel · NSE

₹40.28+₹0.53 (+1.33%)

DalalBaazaar Score

44 / 100

🟡 Moderate

Verdict

CAUTION

Risk

Moderate

Driven by short-term liabilities exceed short-term assets, small-cap size, which brings sharper price swings, a very high earnings multiple, which leaves little margin for disappointment.

In simple words: The business is earning a fairly low return on the money invested in it, with modest growth. Short-term liquidity is the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 6:09 pm

Caution warranted. Multiple fundamental metrics — flagged in red below — point to either valuation stretch, leverage risk, or weakening profitability. This doesn't mean avoid the stock outright, but it does mean the burden of proof is on the growth story to justify the current price.

Understanding the Business

Company site ↗

The 60-second version of NMDC Steel Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

NMDC Steel Limited manufactures and sells iron and steel products in India.

IndustrySteel

SectorBasic Materials

Employees1,045

Annual revenue₹13,642 Cr

How does it make money?

Turns over ₹13,642 Cr a year. Of every ₹100 of sales, about ₹0 reaches shareholders as profit, with ₹12 left at the operating level before interest, tax and depreciation. Each of its 1,045 employees supports ₹13.05 Cr of revenue a year, the signature of a capital- or asset-led business.

EBITDA margin11.8%

Net margin0.4%

Revenue / employee₹13.05 Cr

Who are its competitors?

The closest listed comparisons in its industry are TATA STEEL LIMITED, JSW STEEL LIMITED, JINDAL STEEL LIMITED, STEEL AUTHORITY OF INDIA. These are the companies its valuation and returns are measured against elsewhere in this report.

TATA STEEL LIMITEDP/E 19.8x · ROE 10.8%

JSW STEEL LIMITEDP/E 12.0x · ROE 24.7%

JINDAL STEEL LIMITEDP/E 39.1x · ROE 5.3%

STEEL AUTHORITY OF INDIAP/E 16.5x · ROE 7.1%

What is its competitive advantage?Little sign of one

Returns on capital of 3.5% are at or below what the capital likely costs. That is the financial pattern of a business competing largely on price, where advantage has to come from execution rather than position.

ROCE3.5%

ROE0.4%

Peer median ROE10.8%

DalalBaazaar Score

44/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ ROCE of 3.5% is below 10% — capital is not working hard
✗ EBITDA margin of 11.8% is thin — little cushion if costs rise
✗ Net margin of 0.6% is slim

Quality vs. Valuation

Company Quality

42/ 100

Weak

How good the business is, ignoring the share price entirely.

Valuation

42/ 100

Expensive

What you are being asked to pay, ignoring how good the business is.

Weak on business quality and not cheap enough to compensate.

Historical Valuation

Current P/E

138.9x

Sector Median

18.2x

median of 4 sector peers

⚠️Against its sector it trades 664% above the peer median of 18.2x.

vs. its own history

Not enough price and earnings history

vs. sector peers

Expensive

18.2x median of 4 peers · +664%

vs. generic bands

Expensive

Above 35x

P/E (Trailing)

138.9x

P/B

0.89x

EV/EBITDA

10.2x

PEG

—

Dividend Yield

None

What's Good / What's Bad

🟢 What's Going Well1

Cash flow has turned positive
Free cash flow moved from negative to positive over 3 years.

🔴 What Needs Attention1

Short-term liquidity is tight
Current ratio of 0.53 — near-term obligations exceed near-term assets.

Red Flags

2 items require attention · 1 high · 1 watch

🔴Thin interest coverageFinancial
Operating profit covers interest only 1.2x — little room if earnings dip.
🟡Short-term liquidity is tightFinancial
Current ratio of 0.53 — near-term obligations exceed near-term assets.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Self-funding with balance-sheet headroom
Positive free cash flow of ₹1,525 Cr alongside low debt means growth, buybacks or dividends need no outside money — and a downturn can be absorbed rather than refinanced.

🔴 Bear CaseWhat could go wrong?

A premium to the sector to defend
It trades 664% above the peer median. That premium needs a reason that persists, or it closes.
Earnings are hard to forecast
Profit has swung sharply from year to year, so any single year — good or bad — is a weak guide to the next. Cyclical earnings deserve lower multiples for that reason.
Size brings its own risk
Small Cap businesses are thinly traded, so exits are harder in a falling market and single events move the price more than they would for a larger company.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1EBITDA margin holds above 10%✓ 11.8%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Debt / EBITDA stays below 2x✗ 2.9x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
3Interest cover stays above 3x✗ 1.2x
How much operating profit can fall before interest stops being comfortably covered.
4Free cash flow remains positive✓ ₹1,525 Cr
Profit that never becomes cash eventually stops being profit.
5ROCE stays above 8%✗ 3.5%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

5 / 11 checks passed

✗ Strong return on equity (ROE ≥ 15%)
✗ Strong return on capital employed (ROCE ≥ 15%)
✗ Healthy net margin (≥ 10%)
✓ Generates positive free cash flow
✓ Manageable leverage (Debt/Equity < 1.0)
✗ Adequate short-term liquidity (Current Ratio ≥ 1.0)
✓ Revenue growing year-over-year
✓ Profit growing year-over-year
✗ Not trading at an extreme valuation (P/E < 40x)
✓ Not buying right at the 52-week high
✗ Short-term technical trend isn't bearish

Price history

Quick Metrics

5 good · 3 neutral · 3 weak

Market Cap

₹11,804 Cr

Small Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

138.9x

Expensive

Expensive — verify against sector peers

P/B Ratio

0.89x

Reasonable

Reasonable against the company's book value

EPS (TTM)

₹0.29

Profitable

Profitable on a per-share basis

ROE

0.4%

Weak

Weak capital efficiency

ROCE

3.5%

Weak

Low return on total capital employed

Debt/Equity

0.35x

Low

Conservative leverage

Revenue Growth (YoY)

8.8%

Modest

Modest growth

Profit Growth (YoY)

111.1%

Healthy

Profits growing at a healthy clip

Dividend Yield

None

No dividend yield reported — usually means no payout, but verify if one was recently initiated

Free Cash Flow

₹1,525 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

CMP

₹40.28

Operating Margin

4.3%

Weak

Thin margins leave little room for error

Net Margin

0.6%

Weak

Very little revenue reaches the bottom line

Current Ratio

0.53

Tight

Tight short-term liquidity

Beta (vs Nifty)

0.71

Defensive

Steadier than the market

52W Range Position

35%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

41.1 / 42.5

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

33.7

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	—	₹3,049 Cr	₹8,503 Cr	₹13,642 Cr	—
EBITDA	₹36 Cr	-₹1,289 Cr	-₹1,717 Cr	₹1,604 Cr	+256.0%
EBITDA Margin	—	-42.3%	-20.2%	11.8%	—
PAT (Net Profit)	—	-₹1,560 Cr	-₹2,374 Cr	₹59 Cr	—
EPS	—	₹-5.32	₹-8.1	₹0.2	—
ROE	—	-10.1%	-18.1%	0.4%	—
ROCE	—	-8.4%	-14.4%	3.5%	—
Total Debt	₹3,842 Cr	₹6,662 Cr	₹5,909 Cr	₹4,613 Cr	+6.3%
Free Cash Flow	-₹621 Cr	-₹3,409 Cr	₹1,538 Cr	₹1,525 Cr	—

🟢 EBITDA has grown at 256.0% a year over 3 years.

🟢 EBITDA Margin has risen from -42.3% to 11.8% over 3 years (+54.0 pts).

🟢 PAT (Net Profit) has turned positive, from -₹1,560 Cr to ₹59 Cr.

🟢 EPS has turned positive, from ₹-5.32 to ₹0.2.

🟢 ROE has risen from -10.1% to 0.4% over 3 years (+10.5 pts).

🟢 ROCE has risen from -8.4% to 3.5% over 3 years (+11.9 pts).

🔴 Total Debt has grown at 6.3% a year over 3 years.

🟢 Free Cash Flow has turned positive, from -₹621 Cr to ₹1,525 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹28,237 Cr

Total Liabilities

₹15,064 Cr

Total Debt

₹4,613 Cr

Cash & Equivalents

₹9 Cr

Operating Cash Flow

₹1,796 Cr

Capex

-₹271 Cr

Shareholding (proxy)

Institutional Holding

17.1%

Insider Holding

60.8%

Peer Comparison

Company	P/E	ROE
TATA STEEL LIMITED	19.8x	10.8%
JSW STEEL LIMITED	12.0x	24.7%
JINDAL STEEL LIMITED	39.1x	5.3%
STEEL AUTHORITY OF INDIA	16.5x	7.1%

Recent News

4 mixed2 general

NMDC Steel share price jumps 6%; what's next as experts see weakness in technical chart | Support, resistance

Livemint, 15 OctPrice move

🟡Mixed / dependsA price move, which is not by itself a change in the business. Worth finding the cause before reading it as either good or bad.

NMDC Steel schedules 11th AGM for September 28, 2026

scanx.trade, 28 Sept

Why NMDC Steel Share Price is Falling

Equitymaster, 17 AugPrice move

🟡Mixed / dependsA price move rather than a change in the business. If the figures on this page have not moved, the fall is either an opportunity or news they have yet to catch up with.

NMDC Steel Ltd. Shareholding Pattern – Promoters, FIIs & DIIs

Value Research, 29 Aug

NMDC Steel Shares Slide 9% After Weak Q1 Margins

Equitypandit, 17 AugResults

🟡Mixed / dependsA results event. The figures on this page update once the new statements reach the data feed, which usually lags the announcement.

NMDC Steel Q3 Results 2026 - Find NMDC Steel Q3 Earnings Result | NSLNISP Q3 results

Livemint, 16 OctResults

🟡Mixed / dependsA results event. The figures on this page update once the new statements reach the data feed, which usually lags the announcement.

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

🔴Business QualityWeak5.9/20

🟡Financial HealthAdequate11/20

🟡GrowthModest10/20

🔴ProfitabilityWeak4.5/15

🟡ValuationFair7.7/15

🟡RiskModerate4.9/10

Weak on the fundamentals

Poor scores on business quality without a price low enough to compensate. There is no obvious argument for owning this over a stronger company at a similar valuation. 1 high-severity red flag sits above this conclusion and should be read first.

This thesis breaks if

✓EBITDA margin holds above 10%11.8%
✗Debt / EBITDA stays below 2x2.9x
✗Interest cover stays above 3x1.2x
✓Free cash flow remains positive₹1,525 Cr
✗ROCE stays above 8%3.5%