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NMDC Group PJSC's (ADX:NMDC) Fundamentals Look Pretty Strong: Could The Market Be Wrong About The Stock?

Simply Wall St · 2d ago

NMDC Group PJSC (ADX:NMDC) has had a rough month with its share price down 10.0%. But if you pay close attention, you might gather that its strong financials could mean that the stock could potentially see an increase in value in the long-term, given how markets usually reward companies with good financial health. Particularly, we will be paying attention to NMDC Group PJSC's ROE today.

ROE or return on equity is a useful tool to assess how effectively a company can generate returns on the investment it received from its shareholders. Put another way, it reveals the company's success at turning shareholder investments into profits.

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How To Calculate Return On Equity?

The formula for return on equity is:

Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity

So, based on the above formula, the ROE for NMDC Group PJSC is:

25% = د.إ3.7b ÷ د.إ15b (Based on the trailing twelve months to September 2025).

The 'return' is the income the business earned over the last year. That means that for every AED1 worth of shareholders' equity, the company generated AED0.25 in profit.

Check out our latest analysis for NMDC Group PJSC

Why Is ROE Important For Earnings Growth?

We have already established that ROE serves as an efficient profit-generating gauge for a company's future earnings. We now need to evaluate how much profit the company reinvests or "retains" for future growth which then gives us an idea about the growth potential of the company. Generally speaking, other things being equal, firms with a high return on equity and profit retention, have a higher growth rate than firms that don’t share these attributes.

NMDC Group PJSC's Earnings Growth And 25% ROE

To start with, NMDC Group PJSC's ROE looks acceptable. Especially when compared to the industry average of 9.1% the company's ROE looks pretty impressive. Probably as a result of this, NMDC Group PJSC was able to see an impressive net income growth of 40% over the last five years. We reckon that there could also be other factors at play here. Such as - high earnings retention or an efficient management in place.

As a next step, we compared NMDC Group PJSC's net income growth with the industry, and pleasingly, we found that the growth seen by the company is higher than the average industry growth of 14%.

past-earnings-growth
ADX:NMDC Past Earnings Growth December 3rd 2025

Earnings growth is a huge factor in stock valuation. It’s important for an investor to know whether the market has priced in the company's expected earnings growth (or decline). This then helps them determine if the stock is placed for a bright or bleak future. If you're wondering about NMDC Group PJSC's's valuation, check out this gauge of its price-to-earnings ratio, as compared to its industry.

Is NMDC Group PJSC Efficiently Re-investing Its Profits?

NMDC Group PJSC has a really low three-year median payout ratio of 23%, meaning that it has the remaining 77% left over to reinvest into its business. So it seems like the management is reinvesting profits heavily to grow its business and this reflects in its earnings growth number.

Additionally, NMDC Group PJSC has paid dividends over a period of five years which means that the company is pretty serious about sharing its profits with shareholders. Upon studying the latest analysts' consensus data, we found that the company's future payout ratio is expected to rise to 33% over the next three years. Regardless, the future ROE for NMDC Group PJSC is speculated to rise to 685% despite the anticipated increase in the payout ratio. There could probably be other factors that could be driving the future growth in the ROE.

Conclusion

In total, we are pretty happy with NMDC Group PJSC's performance. Particularly, we like that the company is reinvesting heavily into its business, and at a high rate of return. Unsurprisingly, this has led to an impressive earnings growth. Having said that, on studying current analyst estimates, we were concerned to see that while the company has grown its earnings in the past, analysts expect its earnings to shrink in the future. To know more about the latest analysts predictions for the company, check out this visualization of analyst forecasts for the company.