The Orissa Minerals Development Company Limited mines and markets iron ore and manganese ore in India. It also produces and sells sponge iron. The company was incorporated in 1918 and is headquartered in Bhubaneswar, India. The Orissa Minerals Development Company Limited is a subsidiary of Eastern Investments Limited.

India

The Orissa Minerals Development Company Limited

Basic Materials

The company pays dividends on rare occasions. There have only been a few years with dividend payments in the past ten years. Dividend per share (DPS) has grown yearly, and there is a clear trend. In the past 12 months, the dividend yield has barely been above zero and was substantially below that of its peers. 

ORISSAMINE.NS reported revenue of INR 919mn in the last 12 months, up 66% from FY23. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. 

The stock has been falling steadily in the past six months, losing 34% in total. The stock has lagged its global peers from the same sector and industry (as shown above), underperforming then by 33ppts in total. This is largely true for peers from the same country and sector. With respect to the stock's valuation against its peers, its overall price performance is slightly negative.

The company has reported average EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 27.5% in the last 12 months, up from 14.3% in FY23. 

Historically, ORISSAMINE.NS has reported very poor net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 5.1%, a growth from -19.1% in FY23. 

The Orissa Minerals Development Company Limited reported a return on equity (RoE) of -41.4% in the last 12 months, down from 89.6% in FY23. 

In the last 12 months, the return on capital employed (RoCE) grew to 170.7%, above the peers. 

Another important profitability metric, return on assets (RoA), amounted to 1.4% in the last 12 months, an increase from -2.9% in FY23. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been -4.4 in the past several years. This ratio implies a fragile shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are close to minimal. In combination with rigorous business standards, shareholder rights are well protected.

ORISSAMINE.NS has below average trading liquidity. The average private investor can sell his common position in the stock in a single trading day. Liquidity may be unstable and becomes extremely unfavourable on the days with the lowest activity. The trading volume mostly stays the same even under highly turbulent market conditions. The stock has a small market capitalisation, which usually makes its trading liquidity erratic and unpredictable. 

No other major risks have been identified.

The risk of default is moderate. We note resilient historical revenue growth, robust profitability, and an favourable capital structure, among the positive credit factors. Among the negative credit factors, we point to weak positions in its industry, negligible return on capital, weak debt servicing capacity, inadequate interest coverage, and poor cash flow generation.

In highly turbulent market conditions, ORISSAMINE.NS is not overly volatile. In other words, the stock will fall less than the index in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be low. 

In normal market circumstances, ORISSAMINE.NS is moderately volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will move slightly wider than the index. The stock's losses on its worst days (less than 1-5% of the time) will range from low to mild. We would also like to highlight the mild intraday volatility of the instrument. 

Based on key historical and expected multiples, the stock is greatly overvalued relative to its peers. In particular, the stock is overpriced on P/E, 'expensive' on EV/EBITDA, overvalued on P/FCF. 

The Orissa Minerals Development Company Limited

₹ 5078.5

3

The Orissa Minerals Development Company Limited

₹ 5078.5

3

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

₹ 5078.5

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