Shares of NMDC rose nearly 3 per cent to Rs 117.75 in intraday trade on the Bombay Stock Exchange on Thursday as the state-owned mineral producer's share buyback process started today. The Rs 1,378 crore share buyback proposal of NMDC is scheduled for closing on December 31, 2020.
The NMDC's board had approved the share buyback proposal in a meeting on November 11, 2020. The buyback comprises of 13,12,43,809 fully paid-up equity shares, representing 5 per cent and 5.05 per cent of the total fully paid-up equity share capital and free reserves, of a face value of Re 1 each from the company's shareholders at a price of Rs 105 per equity share payable in cash.
"The board has unanimously approved a proposal for the buyback of 13.12 crore fully paid-up equity shares of face value of Rs 1 each, representing 4.29 per cent of the total number of fully paid-up equity shares of the company, at a price of Rs 105 payable in cash for an aggregate consideration not exceeding Rs 1,378.06 crore, representing 5 per cent and 5.05 per cent of the aggregate of the fully paid-up equity share capital," NMDC had said in a filing to the BSE.
The tender offer at Rs 105 per share is at 11 per cent discount compared to current trading price of Rs 117.75.
Early today, NMDC shares opened marginally lower at Rs 113.70 against the previous closing price of Rs 114.65, but soon rebounded to gain as much as 2.7 per cent to touch an intraday high of Rs 117.75. The stock has rallied 90 per cent in the last eight months from its 52-week low of Rs 62 on March 13, 2020. The market cap of the company has surged to Rs 35,548.07 crore.
IDBI Capital Markets & Securities Ltd is handling the share buyback offer as the Manager for the state-owned iron ore mining major.
Analysts at Emkay Global has recommended a 'buy' call on the stock with a target price of Rs 160, citing that the floor price of the buyback is less than the current market price of the stock. The recent rise in iron ore prices and increased interest in PSU stocks on account of cheap valuations further add to the value.
NMDC, which comes under the steel ministry, is the country's largest iron ore miner. Besides iron ore, it is also involved in the exploration of a wide range of minerals like copper, rock phosphate, lime stone, dolomite and gypsum.
By Chitranjan Kumar