NMDC declines 9 per cent post demerger announcement

NMDC declines 9 per cent post demerger announcement

Pratik Shastri
/ Categories: Trending, DSIJ News

The shares of government-owned iron ore manufacturer NMDC Ltd further declined as much as 9 per cent intraday, on Monday. The stock price initially reacted to the demerger news, which was announced during the weekend.

The company said that its board approved the demerger steel plant in Chhattisgarh, which is yet to be commissioned. The steel plant, which was made with a capital expenditure of Rs 17,000 crore for 3 million tonnes/annum integrated NMDC Iron & Steel Plant in Nagarnar in the state of Chhattisgarh, will take at least 8 to 9 months to complete.

The company further added that the Capex budget worth Rs 4,000 crore is pending while the balance funding is supposed to be made through leveraging the steel plant. The steel plant is considered to deleverage and has enough cash to carry its business without recourse. Earlier, the company has reported to have an increased lump ore (65.53, 6-40 mm) to Rs 2,950/tonne Rs 2,650/tonne from price fines to Rs 2,660/tonne from Rs 2,360/tonne.

On the operational front, the sales volume declined 28 per cent on a YoY basis to 6.28 million tonnes in the first quarter of FY21. The resultant decline in the operating profit was 60 per cent over the same period last year to Rs 750 crore, (EBITDA per tonne stood at Rs 1,201, down by 44 per cent).

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