Recent Price Performance and Market Context
NMDC has demonstrated resilience in its price trajectory over various time frames. In the past week, the stock gained 3.38%, significantly outpacing the Sensex's marginal 0.01% increase. Over the month, NMDC's 2.89% rise slightly exceeded the benchmark's 2.70%. Year-to-date, the stock has surged 15.91%, well above the Sensex's 9.69% gain, highlighting its relative strength within the broader market. However, over the last year, NMDC's price declined by 1.45%, contrasting with the Sensex's 4.83% growth, indicating some short-term volatility despite longer-term gains. Notably, the stock has delivered an impressive 88.63% return over three years and 116.99% over five years, outperforming the Sensex's respective 36.41% and 90.14% returns, underscoring its strong growth trajectory.
Technical Indicators and Trading Activity
On the day in question, NMDC's stock price reversed its recent downward trend, gaining after two consecutive days of falls. It is trading above all key moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day averages, signalling a sustained bullish momentum. Despite this, investor participation appears to be waning, with delivery volumes on 04 Dec dropping by nearly 50% compared to the five-day average, suggesting some caution among traders. Liquidity remains adequate, with the stock capable of supporting trades worth approximately ₹3.2 crore based on 2% of the five-day average traded value, ensuring smooth market operations.
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Fundamental Strength Supporting the Rise
NMDC's rise is strongly supported by its solid fundamental profile. The company boasts an average Return on Equity (ROE) of 25.81%, reflecting efficient capital utilisation and profitability. Its net sales have grown at an annual rate of 20.83%, indicating healthy top-line expansion. Furthermore, NMDC maintains a low average debt-to-equity ratio of zero, underscoring a conservative capital structure that reduces financial risk. The current ROE of 21.6, combined with a Price to Book Value of 2.1, suggests a fair valuation, albeit at a premium compared to peers' historical averages. Despite the stock's negative return over the past year, NMDC's profits have increased by 11.8%, and its PEG ratio of 0.7 points to undervaluation relative to earnings growth. Additionally, the stock offers a high dividend yield of 4.34%, making it attractive for income-focused investors.
Institutional Confidence and Market Position
Institutional investors hold a significant 27.43% stake in NMDC, reflecting confidence from well-informed market participants. This holding has increased by 0.74% over the previous quarter, signalling growing institutional interest. NMDC is the second-largest company in its sector by market capitalisation at ₹66,791 crore, trailing only Coal India, and accounts for 18.06% of the sector's market value. Its annual sales of ₹26,689.39 crore represent 14.66% of the industry's total, highlighting its substantial market presence and influence.
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Risks and Cautionary Notes
Despite the positive momentum, investors should be mindful of certain risks. The company reported flat results in September 2025, which may indicate challenges in sustaining growth momentum. Moreover, operating cash flow for the year was at its lowest level of ₹1,577.36 crore, raising concerns about cash generation capacity. These factors could temper enthusiasm and warrant close monitoring going forward.
Conclusion
NMDC's recent price rise on 05-Dec is primarily driven by its strong long-term fundamentals, favourable valuation metrics, and robust institutional backing. The stock's outperformance relative to the Sensex and its sector, combined with technical strength above key moving averages, supports the positive trend. However, subdued investor participation and caution around operating cash flow highlight the need for prudent assessment. Overall, NMDC remains a compelling large-cap stock with solid growth prospects and attractive dividend yield, making it a noteworthy consideration for investors seeking exposure to the metals and mining sector.
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