Shares in the mining company Gujarat Mineral Development Corporation (GMDC) have given multibagger returns during the quarter January-March 2022. The Gujarat-based PSU metal share has increased by over 160% in 2022 (year-to-date) so far, while the multibagger share has soared by about 255% in one year.
GMDC is a mining and mineral processing company in India. The domestic brokerage and exploration company Edelweiss said in a new comment that the PSU mineral and lignite mining company has an advantageous position due to production / realization increases in the existing lignite operations and better prospects for revenue streams in auxiliary minerals.
“In our view, GMDC is moving in the right direction as management is making every reasonable effort to: i) strengthen the existing business; ii) sharpen the focus on price / volume and adapt it dynamically to market conditions; and iii) increase the emphasis on related businesses “Bauxite, bentonite and silica sand. We also anticipate a potential invasion of rare earths as additional value creation,” the note said.
The brokerage believes that the next few months would be crucial for GMDC as BCG and ATK are likely to present their recommendations and results. In addition, lignite prices are likely to remain high as management has structurally changed pricing and the sales process.
The company’s management mentioned that the company’s results are likely to be diversified; revenues from the lignite portfolio would decrease to 50% (currently 80%). GMDC has appointed BCG to help the company draw up a strategic roadmap that extends beyond its traditional operations and comprehensively covers opportunities in value-added products, Edelweiss noted.
Going forward, the brokerage sees the reduced price discount as a substitute to maintain. Edelweiss has retained its “Buy” rating on the multibagger share with a target price of ₹245 per share.
The views and recommendations above are from individual analysts or brokerage firms, and not from Mint.
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