Brokerage and research firm Edelweiss participated in the conference call organized by Gujarat Mineral Development Corporation (GMDC) Management to discuss Q1FY23 results. In a note, it highlighted key points for the company: core lignite business has bounced back, power business losses narrowed, a BCG study has identified a wide range of impending revenue streams.
“The initial forecast regarding rare earth mining appears to be encouraging. In our view, the lignite business is expected to be progressively supplemented by new revenue streams, starting with bauxite and manganese. While multi-metal and rare earth mining projects still have their own are in the early stages, the prospects appear promising,” the note said.
The brokerage house maintains ‘Buy’ rating on GMDC shares with an unchanged target price for 12 months 230. Gujarat-based PSU Metal stock has risen over 134% so far in 2022 (Y-o-Date or YTD), while, multibagger stock Nearly 174% has skyrocketed in a one-year period. GMDC is a mining and mineral processing company in India.
“In the last one year, GMDC has turned a new leaf with the lignite business with 10mtpa production rate and record realization. Despite our estimates of price decline (progressively 10% QoQ), we expect FY23E EBITDA to be at record highs 13.1 bn,” the brokerage said.
With the power division already at break even, Edelweiss expects to further drive higher production performance in both thermal and wind power plants, and it anticipates future opportunities in limestone, silica sand mining and multi-metals to To effectively diversify the income base. In addition, management has on-boarded Mackenzie for the rare-earth business.
“While this is still in its infancy, early signs are encouraging in our view. Additionally, the net cash position and ongoing strong growth provide sufficient balance sheet strength to aggressively pursue growth opportunities. “
The company’s management expressed confidence that there could be many opportunities in the medium term like multi-metal projects, limestone and silica sand mining. “In the near term, the management intends to increase the revenue ratio (ex-lignite and power) to 3% from the present 2%. We also believe that rare earth mining has interesting potential and we will keep an eye on further developments in this regard.”
The views and recommendations given above are those of individual analysts or broking companies and not of Mint.
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