GMDC Stock: State-owned mining giant GMDC (Gujarat Mineral Development Corporation) has come under intense spotlight after brokerage firm Nuvama issued a concerning forecast about the stock’s future trajectory. According to the latest assessment, the brokerage believes that PSU Stocks like GMDC could face a deep correction, with the share reportedly staring at a potential 59% downside from current levels.
Nuvama has maintained a “Reduce” rating on GMDC and assigned a target price of ₹231, signalling a sharp decline from the recent closing price. The report highlights weakening fundamentals, pressure on operating margins and uncertain near-term growth, all of which contribute to the bearish stance.
Weak Financial Performance Adds to Investor Worries
The September quarter results turned out to be disappointing for GMDC share price watchers. The company’s revenue witnessed an 11% year-on-year decline, while operating profit (EBITDA) fell by nearly 50%. More concerning was the fall in EBITDA margin, sliding from 24% to just 13.2%, a clear reflection of rising costs and reduced lignite volumes.
Nuvama has also slashed its FY26 and FY27 EBITDA estimates by 10% and 15%, respectively. The brokerage noted that without one-time gains, GMDC would have reported a net loss for the quarter—an alarming sign that questions the strength of its core operations.
Will the New Thermal Power Plant Boost Growth?
GMDC’s newly commissioned thermal power plant became operational during the September quarter, but its benefits are expected to show up meaningfully only by the March quarter. For FY27, Nuvama expects lignite volume to grow 26%, driven largely by the expansion of the Bhavnagar mine.
Despite this projected growth, the brokerage remains cautious, stating that the rising cost structure and fluctuating demand could limit the company’s margin recovery.
Rare Earth Magnet Hype
One of the major reasons GMDC was trending recently was its renewed focus on rare earth materials, an industry with high future potential. However, Nuvama believes that substantial revenue contribution from this segment will only materialize after FY2028.
This means that any excitement around rare earth opportunities might be premature for investors expecting quick gains. The brokerage clarified that potential benefits from lignite, coal and power operations are already factored into its valuation model.
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Valuation Concerns Put Additional Pressure
Another major red flag is GMDC’s steep valuation. The company is currently trading at 19x EV/EBITDA for FY27 and 15x for FY28, levels that Nuvama considers excessively high given the weakening fundamentals.
What’s even more striking is that Nuvama is the only brokerage actively covering GMDC at the moment, making its downgrade even more impactful for market sentiment.
Current Market Trend
GMDC’s stock ended Tuesday’s session nearly 4% lower at ₹541.55. For the year 2025 so far, the stock has already fallen around 21%. With mounting operational challenges and steep valuation, the road ahead could be rocky unless margins improve substantially.
