NMDC Steel fell as much as 9% on Monday after the company’s June quarter results showed weaker operating margins despite higher profit.

Here’s the thing though, the headline numbers actually look decent at first glance. Profit for the quarter came in at Rs 50.51 crore, nearly double what the company earned in the same period last year.

Revenue also grew, rising 8.8% to Rs 3,661.84 crore.

So the fall is triggered by EBITDA, which is basically a measure of how much money the core business generates before accounting for interest, taxes and other adjustments.

That figure actually dropped 2% during the quarter. And the EBITDA margin, which shows how much profit the company keeps from every rupee of sales, narrowed to 10.9% from 12.1% a year ago.

In simple terms, the company is selling more but keeping less of it as profit from its day to day operations. NMDC Steel isn’t a new name on the exchanges.

It was carved out of parent company NMDC Ltd and listed back in February 2023 at Rs 31.75 a share. Even after Monday’s fall, the stock is still up around 30% from that listing price.

NMDC continues to hold a majority stake of 60.71% in the company, with the remaining shares held by public investors.

Monday’s fall has pushed the stock into negative territory for the year. It is now down close to 7% on a year-to-date basis, having gained ground earlier in the year before this quarter’s numbers changed the picture.

At 14:00 pm, NMDC Steel shares were trading at Rs 41.21 on the NSE, down 7.39% for the day.

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