Shares of NMDC spurted over 15 per cent in Thursday’s trade after hitting a fresh 52-week low earlier in the day.
The scrip hit a 52-week low of Rs 93.60 earlier today, only to stage a smart rebound. By 11.25 am, the stock had hit a high of Rs 108.85, up 16.29 per cent over its day’s low. A total of 62.81 shares had changed hands on the counter compared with a two-week average of 5.35 lakh shares.
The scrip went ex-demerger today. The company had earlier this month announced a demerger of NMDC Steel and had fixed the record date for the same as October 28, Friday.
On this day, the company will identify shareholders of the demerged company and would allot shares of NMDC Steel in a 1:1 ratio.
Analysts noted that the demerger was long-awaited and is positive for the stock as it unlocks the value of NMDC’s Rs 21,000 crore investment in the steel plant.
‘Even if the market builds in 50 per cent of the steel plant investment, the new shares can list at Rs 36 per share in Q3FY23. This would help unlock the value of minority shareholders,” said Nuvama Institutional Equities in a recent note.
Nuvama Institutional Equities advised investors to accept the new share of steel plant and await for its sale for full value unlocking, which is likely in the second half of 2024.
Valuing the iron ore business at 4 times FY24 EV/Ebitda and ascribing Rs 36 per share of investment, to the 3 mt per annum steel plant yields a target of Rs 157. “At CMP, the steel plant comes virtually free,” it said.
