NMDC spurts up 9%

NMDC is right there among the top three gainers on the BSE since opening bell. The stock which had closed yesterday at Rs.96, opened today at Rs.100.30 and then went up to Rs.107.60, which is not too far from its 10% UC of the day at Rs.110.40. Volumes have jumped up almost 4.5 times.

The spike up in the stock price was despite the dismal Q1FY21 earnings.

The company ended the quarter with a 55% (YoY) slump in net profit at Rs.533 crore, impacted due to the pandemic. The PSU said that it lost sales of over 23 lakh tonnes on account of the pandemic and this in turn, led to an overall revenue loss of Rs.737 crore during Q1.

The turnover during Q1 was down at Rs.1,938 crore v/s Rs.3264 crore. The company produced 66.05 lakh tonnes and sold 62.75 lakh tonnes (lt) of iron ore during Q1FY21.

The PSU also said that its Board approved the proposal to demerge its NMDC Iron & Steel Plant in Nagarnar, Chhattisgarh. The company is setting up its first steel plant having capacity of 3 million tonnes per annum (MTPA) at Nagarnar at a cost of about Rs 20,000 crore and is expected to be commissioned by next year only, missing the July 2020 deadline due to Covid.

Brokerage houses have given a buy call on the stock despite the earnings as they feel that consistent price hikes are round the corner and this demerger too will work in its favor.