Investor Presentaiton
furtisments
HV-RYE
GMDC Ltd.
HDFC securities G
Click. Invest. Grow. YEARS
Industry
LTP
Industrial Minerals
Rs 161.7
HDFC Scrip Code
BSE Code
NSE Code
Bloomberg
CMP August 05, 2022
Equity Capital (Rs Cr)
Equity Share O/S (Cr)
Face Value (Rs)
Recommendation
Base Case Fair Value
Bull Case Fair Value
Time Horizon
Buy on dips in Rs 160-163 band and add on dips in Rs 144-147 band
Rs 179
Rs 195
2-3 quarters
GUJMINEQNR
Our take:
532181
GMDCLTD
GMDC IN
161.7
63.6
2
31.8
5142.1
149.9
3749003
228.4
57.6
Market Cap (Rs Cr)
Book Value (Rs)
Avg. 52 Wk Volumes (NSE)
52 Week High
52 Week Low
Share holding Pattern % (Jun, 2022)
Promoters
74.0
Institutions
5.7
Non Institutions
Total
HDFCsec Retail research
stock rating meter
for details about the ratings or at the end of the report
* Refer at the end for explanation on Risk Ratings
Fundamental Research Analyst
Pranav Jain
[email protected]
20.3
100.0
Gujarat Mineral Development Corporation Ltd. (GMDC) is one of India's leading mining and mineral processing companies. is India's
second largest Lignite-producing company. The company is also involved in the exploration of Bauxite, Fluorspar, Manganese, Silica Sand,
Limestone, Bentonite and Ball Clay and also has a sizeable presence in energy sector. In FY22, the company posted its best ever annual
results over the last 5 years and the 2nd best in the company's life so far after posting a shocking net loss in FY21. The company has
embarked on a major transformative exercise to change its fortunes and has roped in four top global management consulting firms- Boston
Consulting Group (BCG), McKinsey & Co, AT Kearney and Deloitte to achieve its targeted objectives, production diversity and increased
profitability. Being the only miner of Lignite in Gujarat places it is at an advantageous position with regards to its customers. Purchasing of
coal from Coal India located about 700 km away proves to be a logistic issue as well as high transportation cost. Hence, they prefer Lignite
produced by GMDC though lignite carries lower calorific value. GMDC's customers mainly comprise of small to medium players whose
boilers are designed to run on domestic lignite. In FY22, ~90% of the revenue comes from mining.
Valuation & Recommendation:
A change in the top management last year proved effective in turning around the company in FY22. Also, rise in prices of international coal
prompts users to shift to cheaper sources like lignite, thereby raising demand. Further, the Russia-Ukraine war has shot up coal prices and
global coal prices are expected to remain robust in the medium term as natural gas has become scarce due to export cutback by Russia. The
demand for lignite in Gujarat is about 25-28 million tons (mt) and GMDC produces about 8.5mt. Hence, there is a huge scope for growth,
given that the company targets volumes of about 10 MT for FY23. It is working on six new mining projects (having reserves of 540mt) with
a capex of Rs 670 crores for FY23.
Management's focus is to diversify the revenue base of the company from lignite and so the company plans to foray into manufacturing of
rare-earth elements, and non-lignite businesses such as silica sand, Fluorspar, multi metal, and limestone for which it has roped in BCG for
feasibility study. In the coming years, it aims to earn at least ~50% revenue from the non-lignite portfolio. This will help the company to
mitigate the risk of dependence on a single commodity and also improve the ESG rating of the company. The company is planning to develop
6 new mines over next 1.5-2 years to ensure that production stays above 10 million tons per annum (mtpa). Further, there is a distinct focus
on value added products in Bauxite and other minerals.
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