NMDC base price fixed at Rs 147 a share

The government on Tuesday fixed Rs 147 a share as the base price, a 7.7 per cent discount at the market rate, for sale of its 10 per cent stake in miner NMDC. The one-day stake sale opens tomorrow on the bourses. If fully sold, government will get up to Rs 5,828 crore from the sale of 39,64,71,600 shares in NMDC, the largest iron ore miner in the country, through the offer for sale (OFS), the route followed in the Hindustan Copper share sale last month.

NMDC’s shares settled at Rs 159.30 a piece, up 2.94 per cent over the previous closing on the BSE. In the NSE, shares closed at Rs 159.05 apiece, up 2.78 per cent. Sensex were down by 0.12 per cent, to close at 19,387.14. The government has 90 per cent holding in NMDC. The Cabinet Committee on Economic Affairs had on October 25 approved the disinvestment. The issue will be the second disinvestment in this financial year, in which the government has set a Rs 30,000 crore fund-raising target through share sale of at least a dozen firms.

The NMDC share sale will take place on separate windows of the stock exchanges, BSE and NSE. It will start tomorrow at 9.15 am and close on the same day at 3.30 pm.

Sources said government is confident of smooth-sailing of the offer due to strong fundamentals of the Hyderabad-based company.

Government had offered 41 per cent discount to the investors in HCL issue through which it had generated Rs 808 crore. Despite that, state-run financial institutions had to chip in in the last moment to save the issue.

NMDC, sitting on a cash pile of over Rs 22,000 crore and commands around 41 per cent share in the domestic iron ore market, is also a debt-free company. In the last financial year, NMDC had reported a net profit of Rs 7,265.39 crore and net sales of Rs 11,260.53 crore. However, in the June-September quarter, its net profit was down nearly 15 per cent at Rs 1,678.62 crore largely due to fall in sales and lower production.