NMDC rebounds; sources say auction price may be at a discount

NEW DELHI: Shares of NMDC Ltd bounced back in morning trade after losing nearly 2 per cent on Tuesday, weighed down by concerns that the auction price may be at a discount.

The government has fixed a price band of Rs 145-150 per share for its stake sale of 10 per cent in NMDC on stocks exchanges on Wednesday that could fetch up to Rs 5,947 crore. The price band is at a discount of 3.07-6.3 per cent at Monday’s closing price of NMDC shares on BSE at Rs 154.75 per share.

At 09:50 am, NMDC was trading 2.2 per cent higher at Rs 158.35. It has hit a low of Rs 151.40 and a high of Rs 157.70 in trade today.

The stock is likely to fall in short term chasing the likely price band which is below Monday's close of 154.75 rupees, according to analysts.

The government, which has 90 per cent holding in the iron ore producer NMDC, plans to divest 39.65 crore shares, amounting to 10 per cent of its equity through offer for sale, the route followed in the Hindustan Copper share sale last month.

"The fundamentals of the iron ore maker is also stronger compared to HCL and above all, it is a debt-free company," PTI reported.

"In addition, NMDC is sitting on a cash pile of over Rs 20,000 crore and commands around 41 per cent share in the domestic iron ore market," said the report.