Cheap for a reason

Despite a bearish consensus, NMDC is gaining ground. But, it's still early days

About 22%, 30%, 48% — that's how the bets are placed on the state-owned iron ore mining company National Mineral Development Corporation (NMDC). Of the 23 analysts tracking the stock, the first percentile comprises the most bullish lot, who expect the stock to touch ₹158 against its current market price of ₹128. The second and third percentiles are the bearish folks who expect the price to tank to ₹91 and ₹67, respectively. In short, the Street is voting with its feet on the PSU.

And it’s not without reason. After sinking in ₹10,000 crore in setting up a 3 million tonne per annum integrated steel plant in Bastar district of Chhattisgarh, the miner now wants to pull the plug on the diversification. In FY16, the company had made a return on capital of 14%, the lowest in its history as international iron ore prices fell from a peak of $155 a tonne in 2013 to $40 a tonne in December 2015. The prices have since recovered to $75 a tonne.

But despite consensus stacked against it, the stock has been gainin


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