Prabhudas Lilladher has recommended 'Buy' on NMDC with target price of Rs 158 as against current market price (CMP) of Rs 129 in its report.

Commenting on the investment rationale, Prabhudas Lilladher said, ''NMDC is the largest and one of the efficient iron ore producers in the country with best infrastructure and hassle-free operations in place. We are initiating coverage on NMDC with a 'BUY' rating and target price of Rs 158. With an improved demand outlook and reduced domestic supplies, we expect domestic prices to remain firm.

Backed by lean operations and efficient infrastructure, NMDC is expected to be the biggest beneficiary of firm prices. This, coupled with a strong balance sheet (cash of Rs 48/share), attractive dividend yield at 6% and undemanding valuations, substantiates our positive recommendation on the stock. We value the stock at Rs 158, EV/EBITDA of 5.0x FY15E.

Led by reduced supplies and depreciation in Rupee, NMDC hiked prices by 10% during Sep 2013-Mar 2014. We expect prices to remain firm on the back of impending risk to iron ore mining in Odisha and slow resumption of mining in Karnataka.''

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