NMDC FPO Gets Poor Response On Day One (11-Mar-2010)
NMDC, mining major and the third government-owned company to hit the capital markets this year, received a very poor response on the first day of follow-on offer (FPO).
As per the details available on the National Stock Exchange (NSE) website, the FPO was subscribed only 0.17 times with bids received for 57.12 million shares.
The bids were at the lower end of the price band (Rs 300), suggesting that the investors prefers to stay away owing to concerns over high valuations.
The FPO includes 332.24 million shares in the price band of Rs 300 to Rs 350.
The entire issue is being made through the book-building route after the failing of the French auction system, which was used for REC and NTPC FPO in order to attract institutional investors.
The FPO opens yesterday and will close on March 12.
Meanwhile, the shares of NMDC, which remained on the sellers' radar for the past few days rose marginally on Wednesday.
On the Bombay Stock Exchange, it closed at Rs 379.85, up 1.1 per cent. On NSE, it closed at Rs 380, up Rs 2.35. NMDC's day one performance, however, was similar to that of other FPOs from state-owned companies.
On the other hand, NTPC's FPO was subscribed 0.77 times on its opening day and only 1.2 times on the final day.
While Rural Electrification Corporation FPO was subscribed 0.2 times on the first day and finally subscribed 3.14 times.
In both cases, institutional investors like state-owned Life Insurance Corporation stepped in to take up the slack from retail investors.
Meanwhile, NMDC is currently trading at Rs.368.35, down by 3.02% at 9.58 AM.
The stock hit an intraday high of Rs.372 till now, as against the 52-week high of Rs.571.8.The stock hit a low of Rs.367.3 during the day. The stock had hit a 52-week low of Rs.141 on March 16, 2009.
The stock opens at Rs.371 at BSE. The total traded volume of the scrip on BSE till now stood at 162854.
Meanwhile today, the BSE Sensex is trading down by -19.26 points, or -0.11% , at 17079.07 on 9:58 AM.
The NSE Nifty is trading down by -7.70 points, or -0.15% , at 5108.55.
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 368.35, the P/E multiple stood at 33.4596761030812 with book Value of 29.35 and P/BV at 12.55.
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. 368.35 at 9:58:00 AM , the stock had underperformed the market over the past one month till 11/03/2010 declined -24.93% as compared to the Sensex's return of 6.46% and NSE Nifty's 6.46 % returns.
Considering the current price of Rs. 368.35 at 9:58:00 AM , the stock had underperformed the market over the past one quarter till 11/03/2010 fell -11.99% as compared to the Sensex's return of -0.11% and NSE Nifty's -0.11 % returns.
Meanwhile, NMDC is eyeing to increase its production capacity to 50 mn tonnes (mt) by 2013-2014 from the current capacity of 30 mt. The company also plans to introduce a new pricing mechanism from 1st April 2010.
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
Moreover, the company is eyeing to establish 3 functional divisions in order to diversify into the energy, infrastructure and fertiliser sectors.
A government official said that the company plans to set up a conventional and non-conventional power projects, steel manufacturing facilities and fertiliser plants under different joint ventures with prospective partners.
He said that the company plans to form 3 separate divisions, each will be headed by expert CEOs. Respective divisions will create alliances with private and public sector companies specialising in respective fields.
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