NMDC Dividend FY2025-26 — ₹1 Final, 4.74% Yield, Record Date 5 Oct

NMDC Limited (NSE: NMDC, BSE: 526371) is a Navratna Central Public Sector Enterprise and the country’s single-largest iron ore miner, producing high-grade (around 64% Fe) ore from mines in Chhattisgarh and Karnataka, alongside diamonds, pellets and wind power. It operates an asset-light, royalty-and-volume-driven model with large cash reserves and no large debt.

The President of India, through the Ministry of Steel, is the promoter with a 60.79% stake. NMDC reported FY26 consolidated revenue of ₹32,071 crore (up ~34% year on year) and net profit of ₹7,450 crore. Its returns profile is strong — ROE ~23% and ROCE ~28% — which underpins NMDC’s long record as a consistent dividend-paying PSU.

The single most important thing to understand about this NMDC dividend is the bonus optical illusion. Many trackers show full-year dividend falling from ₹7.25 (FY24) to ₹3.30 (FY25) and call it a cut. It is not. NMDC issued a 2:1 bonus (ex-date 27 December 2024), tripling shares outstanding to 879 crore. On a comparable, bonus-adjusted basis, FY24’s ₹7.25 equals just ₹2.42 — so the FY25 ₹3.30 was actually a ~37% increase, and FY26’s ₹3.50 is higher still. A second signal: FY26 operating cash flow was only 67% of reported profit, worth watching as receivables build.

NMDC’s dividend direction is tied to iron ore volumes, realisations and its capex cycle rather than to any fixed policy. The company has guided publicly toward scaling production past 40 MTPA, which is lifting capital work-in-progress (CWIP rose to about ₹6,749 cr). Heavier capex competes with cash available for distribution, so future payouts will likely track the commodity cycle. With a net-cash balance sheet, low 41% payout and strong return ratios, NMDC retains headroom to sustain dividends through a normal cycle. The swing factor remains iron ore pricing — NMDC has already trimmed lump and fines prices during 2026, which pressures per-tonne margins.

The NMDC board recommended the ₹1 per share final dividend for FY2025-26 alongside its Q4 results on 29 May 2026, and it was placed before shareholders at the 68th Annual General Meeting on 28 September 2026 (held via video conferencing). The company fixed Monday, 5 October 2026 as the record date to determine entitlement. Including the ₹2.50 interim already distributed during the year, the total NMDC dividend for FY2025-26 comes to ₹3.50 per share. The dividend was an ordinary-business item requiring member approval at the AGM, consistent with the Companies Act, 2013 and SEBI (LODR) Regulations, 2015.

The headline 100% dividend is calculated on the ₹1 face value and tells you nothing about real return. What matters is yield on the market price. At the NMDC share price of about ₹73.77, the ₹1 final dividend yields only 1.36%. The full-year ₹3.50 (interim plus final) yields roughly 4.74%. On the board-recommendation-day price of about ₹88, those figures were 1.14% and 3.98% respectively — so part of today’s higher optical yield simply reflects the share price drifting lower in 2026, not a bigger dividend. Read on a full-year basis, NMDC’s yield is respectable for a large-cap PSU but well below ultra-high-yield metal peers.

On a bonus-adjusted basis NMDC is best described as a consistent but cyclical payer. Distributions tracked the commodity cycle — peaking at an adjusted ₹4.91 in the FY22 super-cycle, easing to ₹2.20 in FY23, then recovering to ₹2.42 (FY24), ₹3.30 (FY25) and ₹3.50 (FY26). There has been no year of zero dividend in the last decade and no outright suspension. The key takeaway is that the apparent “cut” after FY24 is purely the 2:1 bonus effect; adjusted for it, NMDC’s per-share dividend has actually been rising for three straight years.

FY26 showed a classic operating-leverage squeeze. Revenue jumped ~34% (to ₹32,071 cr) but operating profit rose only ~14% (to ₹9,260 cr), and the operating margin compressed from 34% to 29%, a 5-percentage-point fall. In other words, NMDC sold and shipped much more ore but kept less of each rupee as profit — a sign of weaker realisations and higher input/royalty costs rather than demand weakness. Net profit still grew about 14% to ₹7,450 cr, aided by volume. The profit base remains strong, but the margin trend is the number dividend investors should track, because thinner margins eventually limit distributable cash.

Reported profit was ₹7,450 cr, but operating cash flow was only ₹4,996 cr — a cash conversion of just 67%. The gap reflects a working-capital build, with debtor days stretching toward 105–118 days as receivables grew faster than sales. After capex, free cash flow was ₹1,826 cr. That is the crucial number: FY26 free cash flow covered the ₹879 cr final dividend 2.1x, but covered the full-year ₹3,077 cr payout only 0.59x. So the complete FY26 dividend was not fully funded by current-year free cash — the shortfall was met from NMDC’s large cash reserves, not from borrowing.

Applying four coverage tests to the NMDC dividend:

• Earnings coverage: EPS ₹8.47 covers the ₹3.50 total dividend 2.42x — comfortable.
• Operating cash coverage: OCF covers the full payout 1.62x — adequate.
• Free cash coverage: FCF covers the full payout only 0.59x — the weak link.
• Liquidity coverage: cash reserves cover the payout 3.3x — strong.

On balance, the NMDC dividend is assessed as Sustainable — backed by strong earnings and a net-cash balance sheet — but with a clear caveat that current-year free cash flow did not fully fund the complete FY26 payout.

With the Government of India holding 60.79% of NMDC, most of the dividend flows to the sovereign promoter. Of the ₹879 cr final-dividend outflow, roughly ₹534 cr accrues to the Centre; across the full FY26 payout of ₹3,077 cr, the government’s share is about ₹1,871 cr. Minority (public) shareholders — including FIIs at 13.60%, DIIs at about 13.77% and retail at 11.84% — collectively receive the remaining ~₹1,207 cr. This is a common PSU dynamic: generous dividends partly serve the government’s own fiscal needs, but minority holders benefit pro-rata on identical per-share terms.

Since FY2020-21, dividends are taxed in the shareholder’s own hands at their income-tax slab rate as “income from other sources” — there is no separate dividend distribution tax. Under Section 194, the company deducts TDS at 10% (where PAN is provided) only if total dividend from the company exceeds ₹10,000 in a financial year (threshold raised from ₹5,000 by the Finance Act, 2025). For NRIs, TDS applies under Section 195 at 20% plus surcharge/cess, or the lower treaty rate.

Worked example (final ₹1 dividend): an investor holding 15,000 shares receives a gross dividend of ₹15,000. As it crosses the ₹10,000 threshold, ₹1,500 TDS is deducted (net credit ₹13,500). At a 30% slab, total tax is ₹4,500, leaving ₹10,500 after tax. A smaller holder of 5,000 shares gets ₹5,000 with no TDS, but the amount is still taxable at slab.

• Iron ore price cyclicality: earnings and dividends swing with ore realisations; NMDC cut Baila lump/fines prices during 2026.
• Margin compression: FY26 operating margin fell from 34% to 29% despite higher volumes.
• Cash conversion gap: OCF was only 67% of profit as receivables (debtor days ~105–118) rose.
• Capex intensity: CWIP climbed to ~₹6,749 cr, competing with cash available for dividends.
• Government/PSU overhang: as a 60.79% state-owned entity, pricing, offers-for-sale and policy decisions can be shaped by non-commercial objectives.

• Monthly production & sales: NMDC reports these; weak sales (as in September 2026) move the stock quickly.
• Iron ore price revisions: each lump/fines price change directly affects per-tonne margins.
• Operating margin trend: whether the 29% margin stabilises or erodes further.
• Free cash flow & receivables: recovery in FCF and normalisation of debtor days.
• Capex execution: the 40-MTPA expansion and how it is funded relative to dividends.

NMDC’s ₹1 final dividend takes its FY2025-26 payout to ₹3.50 per share, a full-year yield near 4.74% on the current price. The positives are clear: a net-cash balance sheet, a conservative ~41% payout, strong ROE/ROCE, and — once the 2:1 bonus is adjusted for — a per-share dividend that has risen three years running. The negatives to weigh are margin compression, a soft 67% cash conversion, and a full-year payout not fully covered by current free cash flow. For income-focused investors, NMDC is a cyclical PSU dividend play whose attractiveness hinges on the iron ore cycle. The facts are laid out here — the decision is yours.

This article is for informational and educational purposes only and does not constitute investment, legal or tax advice, nor a recommendation to buy, sell or hold any security. ShareBazaar Online is not a SEBI-registered investment adviser. Disclosed facts (dividend amount, record date, AGM) are drawn from NMDC’s exchange filings; financial and market figures are sourced from public providers such as Screener.in and broker platforms and may contain errors or be time-sensitive — the NMDC share price in particular changes continuously and should be re-verified before any decision. Dividend taxation depends on individual circumstances; consult a qualified professional. Investments in securities are subject to market risks. Please read all related documents carefully before investing.