NMDC Steel Ltd (Rs.39.39) – Q4FY25 Results Analysis: On the Road to Recovery?

Based on NDTV Profit inputs and corroborated across financial sources, here’s a comprehensive breakdown of NMDC Steel Ltd.’s performance for the quarter ended March 2025 (Q4 FY25).

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Financial Highlights (Quarter-on-Quarter: Q4FY25 Vs Q3 FY25):

Revenue: ₹2,838 crore, up 34% from ₹2,120 crore in Q3 FY25. This surge likely stems from improved output at the Nagarnar Steel Plant, which began commercial operations in August 2023. The plant’s ability to produce premium hot-rolled products—HR coils, sheets, and plates—is beginning to show in topline growth.

EBITDA Loss: Sharply narrowed to ₹291 crore from ₹656 crore, marking a 56% improvement. This signals better cost efficiency and operational stabilization as the plant scales up.

Net Loss: Reduced to ₹473 crore from ₹758 crore, a 38% decline. While the company remains in the red, the trend reflects progress toward financial viability despite high interest outgo and fixed costs from the ₹23,000 crore steel project.

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Year-on-Year (YoY: Q4 FY25 Vs Q4 FY24):

Revenue: ₹2,838 crore vs ₹1,846 crore—54% growth, indicating solid market demand and production traction.

EBITDA Loss: Slashed by nearly 70% to ₹291 crore from ₹960 crore, showing improved cost discipline and operational ramp-up.

Net Loss: Trimmed to ₹473 crore from ₹861 crore, a 45% YoY improvement. Chairman Amitava Mukherjee reiterated confidence in breakeven during FY25; but it seems it will achieve this in FY26.

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NMDC Steel Ltd. – Annual Performance Review (FY24 vs FY25):

FY25 was a mixed bag for NMDC Steel Ltd. While the company made commendable progress on the revenue front, the bottom line remained under pressure—pushing the long-promised turnaround further down the road.

The company’s revenue surged to ₹8,503 crore in FY25, up from ₹3,049 crore in FY24—an explosive 179% growth, reflecting higher capacity utilisation and steady ramp-up at the Nagarnar Steel Plant.

Incidentally, the hopes of turning profitable in FY25—as projected by CMD Amitava Mukherjee—did not materialise. Instead, net loss widened to ₹2,374 crore from ₹1,560 crore in FY24, marking a 52% increase. This was largely due to persistent startup costs, high depreciation, and interest burdens. Nonetheless, the net loss margin improved significantly from -51.17% to -27.9%, offering a glimmer of hope.

On the operational front, green shoots were visible in Q4 FY25, where EBITDA loss dropped to ₹291 crore from ₹960 crore a year earlier, indicating better cost control and production efficiency.

Mr.Mukherjee’s earlier optimism about a turnaround in FY25 now appears premature. But the operational momentum suggests the stage is finally set for a genuine financial turnaround in FY26, provided current efficiency gains continue and market conditions remain supportive.

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Key Performance Drivers:

Operational Ramp-Up: NMDC Steel’s 3 MTPA Nagarnar Steel Plant, a state-of-the-art facility in Chhattisgarh, has been scaling up since its commercial launch in August 2023. The plant’s ability to produce wide hot-rolled products (up to 1650mm) and specialized steel (e.g., low carbon, HSLA, API quality) likely drove the revenue increase.

Cost Headwinds: Despite revenue growth, the company continues to incur losses due to high interest expenses (10.84% of operating revenues in FY24) and employee costs (1.88% of operating revenues in FY24). The capital-intensive nature of the steel plant, built at ₹24,000 crore, contributes to these financial burdens -- high fixed costs are a structural challenge.

Strategic Edge: The company’s product mix, including HR coils, sheets, plates, and API-grade steel, positions it well in high-demand sectors. The recent ‘Conformité Européenne’ (CE) certification enhances its ability to tap international markets, potentially boosting future revenues.

Proximity to NMDC’s Bailadila iron ore mines (100 km from Nagarnar) ensures steady iron ore supply at competitive rates—an advantage amid volatile global steel prices.

Market Dynamics: Despite sectoral headwinds (weak pricing, global trade frictions), NMDC Steel benefits from strong domestic infrastructure demand. The recent CE certification could open European markets.

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Wider Financial Snapshot:

Estimated FY25 Annual Performance Vs FY24: 

Based on quarterly data, NMDC Steel’s estimated FY25 performance (April 2024–March 2025) shows:

Revenue: ~₹8,536 crore, up 13.6% from FY24’s ₹7,511 crore, driven by the Nagarnar Steel Plant’s operational ramp-up.

Net Loss: ~₹2,373 crore, up 52.1% from FY24’s ₹1,560.32 crore, reflecting high costs despite Q4 improvements.

EBITDA Loss: Reduced to ₹291 crore in Q4 FY25 from ₹960 crore in Q4 FY24, indicating better operational efficiency.While revenue grew significantly, increased losses highlight ongoing profitability challenges. 

However, Q4 FY25’s reduced losses (net loss ₹473 crore, EBITDA loss ₹291 crore) suggest progress toward breakeven, likely in FY26, supported by strategic advantages like iron ore linkage and CE certification.

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Valuation Metrics: As of March 2025, NMDC Steel’s market cap stands at ₹10,327 crore (small-cap territory). With a P/B ratio of 0.72 Vs sector median of 1.93, the stock appears undervalued—but negative earnings mean P/E is not computable.

Ownership Structure: Promoter (President of India) holds 60.79%. FII ownership is modest at 4.58%, and DII holding is 15.34%. Mutual fund interest remains low at 0.48%, reflecting cautious optimism.

The low mutual fund interest (0.48%) reflects cautious optimism, as mutual funds, which often represent retail investor sentiment, may be hesitant due to NMDC Steel’s ongoing losses (e.g., estimated FY25 net loss of ~₹2,373 crore) and stock volatility (down 41.42% in the past year).

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Outlook and Headwinds:

Breakeven in Sight? Chairman Amitava Mukherjee’s statement about expecting breakeven in FY25 aligns with the improving financials, particularly the reduced losses. Continued operational ramp-up and cost optimization will be critical.

Privatization Buzz: Market speculation around strategic disinvestment could influence stock dynamics and investor appetite.

Risks to Monitor: The steel industry’s exposure to global price fluctuations and trade policies (e.g., US-China tariff issues) poses risks. However, domestic demand and NMDC Steel’s modern facility may mitigate these challenges.

Stock Performance: The stock has dropped 41.4% over the past year and 18% YTD (as of Feb 2025). The 52-week high and low stand at ₹67.40 and ₹32.13, respectively—suggesting volatility and investor wariness.

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Conclusion:

NMDC Steel Ltd’s Q4 FY25 results show significant improvement in revenue and reduced losses, driven by the operational scale-up of the Nagarnar Steel Plant. While the company remains unprofitable, the narrowing EBITDA and net losses, coupled with strategic advantages like iron ore linkage and CE certification, position it for potential breakeven in FY26 and indicate that the company is inching toward financial stability. 

The Verdict: 

NMDC Steel may indeed be on the cusp of breakeven. However, high interest costs, market volatility, and competitive pressures remain challenges; increasing investor skepticism.

Investors should watch upcoming quarters closely, especially on production scale-up, debt reduction, and privatization signals.