Last Updated : 11 November 2009 at 13:15 IST

NMDC rises 56% on disinvestment plans

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MUMBAI (Commodity Online): State owned mining major, NMDC, formerly known as National Mineral Development Corporation Ltd (BOM: 526371) recorded heavy gains on the bourses over past five trading session as the stock witnessed over 56% appreciation on Bombay Stock Exchange (BSE).

On Wednesday, NMDC stocks traded at Rs.460 up by over 6% in the morning trades on the Bombay Stock Exchange (BSE).

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Meanwhile, the key benchmark index, Sensex gained 1.5% at 16700 points today. The company stock hit a high of Rs.477 and a low of Rs.436.10 so far during the day.

The stock had outperformed the market over the past one quarter, gaining 18.17% as against 9.53% rise in the Sensex. However, over past five trading sessions the stock has appreciated by 56.8% from Rs.293.60 to the current levels.

The uptrend was mainly seen owing to the government’s decision of diluting its stake giving boost to the disinvestment process.
The government holds 98.38% stake in NMDC (as on September 2009). Shares of public sector units are in demand ever since Prime Minister Manmohan Singh approved divestment in public sector companies on 5 November 2009, to raise funds for social welfare.
According to last week's Cabinet Committee on Economic Affairs (CCEA)'s decision, all the listed and profitable Central Public Sector Enterprises will have to maintain a minimum of 10% public shareholding.

The move by the government is likely to bolster the presence of PSUs in the bourses. The funds from such sale would be directly deployed for social sector schemes, instead of being routed through the National Investment Fund (NIF).

NMDC's net profit declined 18.4% to Rs 770.85 crore on a 14% decline in sales to Rs 1390.13 crore in Q2 September 2009 over Q2 September 2008.

NMDC, is into exploration of a wide range of minerals including iron ore, copper, rock phosphate, lime stone, dolomite, gypsum, bentonite, magnesite, diamond, tin, tungsten, graphite and beach sands.