NMDC expects 50 mt production by 2014

NMDC will also issue its Follow-on Public Offer (FPO) which would open tomorrow, offering 330.5 mn equity shares. Due to the growth in domestic and international demand, the company is expecting increase in prices.

As its agreement for iron ore supply expires on 31st March, the company has also engaged an international advisory body to make recommendations on the pricing structure. The price band for the FPO has been fixed at Rs. 300-350 per equity share by an empowered group of ministers (EGoM).

Currently, prices may vary anywhere between Rs. 2,000 and Rs. 3,700 per tonne depending on the quality of the ore.

NMDC is currently trading at Rs.378.45. up by 0.74%

The stock hit an intraday high of Rs.387.8 till now, as against the 52-week high of Rs.571.8.The stock hit a low of Rs.365 during the day. The stock had hit a 52-week low of Rs.141.

The stock opens at Rs.370 at BSE. The total traded volume of the scrip on BSE till now stood at 653676.

Meanwhile today, the BSE Sensex is trading up by 116.10 points, or 0.68% , at 17168.64 on 10:07 AM.

The NSE Nifty is trading up by 28.00 points, or 0.55% , at 5129.5

NMDC has an equity capital of Rs 396.47 crore as of 2009 Dec. The face value per share is Rs 1. At the current price of Rs 378.45, the P/E multiple stood at 34.3347055729856 with book Value of 29.35 and P/BV at 12.89.

The total shareholding pattern of the company as on Dec 2009 stood at Promoters- 98.38%, Institutional Investors- 1.38%, General Public- 0.15% and other investors- 0.09%.

Considering the current price of Rs. 378.45 at 10:07:00 AM , the stock had underperformed the market over the past one month till 10/03/2010 declined -15.7% as compared to the Sensex”s return of 7.74% and NSE Nifty”s 7.74 % returns.

Considering the current price of Rs. 378.45 at 10:07:00 AM , the stock had underperformed the market over the past one quarter till 10/03/2010 fell -9.45% as compared to the Sensex”s return of 0.29% and NSE Nifty”s 0.29 % returns.

Mr. Rana Som, Chairman of NMDC said the company expects that the production could reach to 50 mn tonnes by 2013-2014 from 30 mn tonnes at present.

The company is also setting up a steel plant at Jagdalpur (Chhattisgarh) with a capacity of 3 mn tonnes, which is likely to commence its operation by early 2014. For the construction of another steel plant in Karnataka, the company has also obtained 2,500 acres of land with an investment of Rs 16,000 crore.

Mr. Som said the company will spend Rs. 15,600 crore in the next 5 years on the steel plant, Rs 1,400 crore on the pallet plant projects and 2,000 crore would be set aside for exploration costs.

NMDC”s net profit after tax during the first 9 months of the current financial year decreased to Rs. 2,381.50 crore, down 28 % from Rs. 3,309.36 crore in the same period in 2008.

The government, which owns 98.38 % of the paid-up equity capital of the company, plans to divest 8.38 % stake through the FPO, which will bring its shareholding down to 90 %.

This will be the 3rd such sale that the government will be resorting to after selling stakes in NTPC and REC in an effort to meet its fiscal deficit target.

The government is also planning to raise Rs. 10,000 crore from this FPO, where it has received around Rs. 14,000 crore as proceeds from the NTPC and REC stake sale.

Mr. Sumit Bose, Disinvestment Secretary said the proceeds that would be available to the government through divesting its stake will enable it to spend in social sector projects like – rural electrification, Indira Awas Yojana and NREGA, among others.