NMDC H1 profit rose 0.3% as costs outpaced revenue growth

NMDC Limited reported record revenue from operations of Rs 13,433 crore in FY27 H1, but profit after tax rose only 0.3% to Rs 3,674 crore as total expenses increased 8%, faster than revenue, while iron-ore sales volume was virtually unchanged at 222.13 lakh tonnes.

What drove NMDC's record H1 revenue?

NMDC's record H1 revenue was driven by higher iron-ore realisation rather than higher sales volume. Average domestic iron-ore realisation rose 7% year on year to Rs 5,520 per tonne in FY27 H1 from Rs 5,170 per tonne in FY26 H1. That lifted iron-ore sales value 7% to Rs 12,261 crore, an increase of Rs 766 crore, although physical iron-ore sales fell by 0.20 lakh tonnes.

Revenue from operations rose 4% to Rs 13,433 crore from Rs 12,895 crore, exceeding the previous H1 high of Rs 13,306 crore in FY22. The increase was lower than growth in iron-ore sales because other sales declined 16% to Rs 1,172 crore from Rs 1,400 crore. Total income nevertheless rose 5% to Rs 14,274 crore, supported by a 29% increase in interest income from bank deposits to Rs 466 crore and a 17% increase in other income to Rs 375 crore.

Why did NMDC's higher production not lift H1 sales volumes?

NMDC's 23% increase in iron-ore production did not lift H1 sales because sales remained nearly flat at 222.13 lakh tonnes, compared with 222.33 lakh tonnes a year earlier. Production rose by 50.70 lakh tonnes to a record 272.72 lakh tonnes in FY27 H1 from 222.02 lakh tonnes in FY26 H1, leaving a 50.59 lakh tonne difference between output and reported iron-ore sales in the latest half-year.

Part of the additional ore moved internally to pellets. Ore transferred for pellets increased 43% to 19.65 lakh tonnes in FY27 H1 from 13.70 lakh tonnes in FY26 H1, an increase of 5.95 lakh tonnes. The presentation does not specify how the remaining difference between higher production and flat sales was allocated, so it does not establish whether inventory, dispatch timing or another factor accounted for it.

The second quarter showed the same divergence. Q2 FY27 production rose 19% to 121.55 lakh tonnes from 102.08 lakh tonnes in Q2 FY26, while sales fell 2% to 104.83 lakh tonnes from 107.16 lakh tonnes. Q2 pellet transfers increased 42% to 11.47 lakh tonnes, indicating that pellet-related internal consumption rose while reported iron-ore sales volume declined.

How did costs affect NMDC's H1 margins and profit?

NMDC's costs rose faster than revenue, reducing its earnings before interest, tax, depreciation and amortisation (EBITDA) margin to 39% in FY27 H1 from 40% in FY26 H1. Total expenses increased 8% to Rs 9,321 crore, or Rs 661 crore, against the Rs 538 crore rise in revenue from operations. EBITDA increased 2% to Rs 5,253 crore from Rs 5,162 crore.

Royalty and other levies rose 31% to Rs 2,976 crore from Rs 2,276 crore, while the additional amount, stated as 150% of royalty, increased 30% to Rs 3,349 crore from Rs 2,581 crore. Together, these two levy lines increased by Rs 1,468 crore. Operational expenses also rose 41% to Rs 3,749 crore, and pellet job-work expenses increased 24% to Rs 677 crore.

The expense comparison included offsets. Purchase of stock in trade declined from Rs 523 crore in FY26 H1 to nil in FY27 H1, while stock adjustment moved to negative Rs 1,430 crore from positive Rs 65 crore. Even after those changes, total expenses rose by Rs 661 crore. Profit before tax increased 1% to a record Rs 4,953 crore, but profit after tax rose only Rs 11 crore to Rs 3,674 crore from Rs 3,663 crore.

What changed for NMDC in the second quarter?

NMDC's Q2 FY27 profitability declined from both the preceding quarter and the prior-year quarter. Profit after tax was Rs 1,667 crore, down 2% from Rs 1,694 crore in Q2 FY26 and down 17% from Rs 2,007 crore in Q1 FY27. Profit before tax was Rs 2,260 crore, Rs 10 crore below the prior-year quarter and Rs 432 crore below Q1 FY27.

Sequentially, Q2 revenue from operations declined 2% to Rs 6,638 crore from Rs 6,795 crore in Q1, as iron-ore sales fell 11% to 104.83 lakh tonnes and average realisation decreased 1% to Rs 5,488 per tonne. Total expenses increased 9% to Rs 4,872 crore from Rs 4,450 crore. EBITDA consequently fell 14% to Rs 2,436 crore, and the EBITDA margin moved to 37% from 41% in Q1.

Against Q2 FY26, revenue from operations still increased 6%, aided by a 10% rise in average realisation to Rs 5,488 per tonne and an 8% increase in iron-ore sales value to Rs 5,754 crore. However, Q2 total expenses rose 11% to Rs 4,872 crore. Operational expenses were 48% higher at Rs 1,948 crore, while royalty and other levies and the additional royalty amount each increased 30%.

Conclusion

NMDC's FY27 H1 figures show that higher production and realisation delivered record revenue, but not comparable profit growth. Output rose 23% and realisation increased 7%, yet sales volume slipped 0.1%, total expenses rose 8%, EBITDA margin declined by one percentage point to 39%, and profit after tax increased by only Rs 11 crore.

The next reported comparison will show whether sales volumes recover from 104.83 lakh tonnes in Q2 FY27 and whether the 37% quarterly EBITDA margin changes from the 41% reported in Q1. The presentation also leaves unresolved how output beyond reported sales and the 19.65 lakh tonnes transferred to pellets in H1 was allocated, making subsequent physical-performance disclosures relevant.