The Hindu Business Line : NMDC shares plunge on FPO pricing

NMDC shares plummeted close to 9 per cent on Tuesday, a day after the price band for its follow-on public offer was fixed at a discount to its market price.

The shares closed down 6.23 per cent at Rs 375.65 on Tuesday. During intraday trade it had touched a low of Rs 365 (down 8.8 per cent from its previous close).

Discount

The price band for the issue has been fixed at Rs 300-350 on Monday. This is at a discount of 13 per cent to 25 per cent to Monday's share price.

“The shares fell today to factor in the price band that has been fixed by the Government. The price band has now bought the valuations of NMDC in parity with its global peers,” said Mr Deven Choksey, Managing Director at KR Choksey.

Mr Jagannadham Thunuguntla, Equity Head at SMC Capital, said the fall will continue till the price reaches the price band level.

Since Thursday NMDC stock has lost more than 13 per cent. It has declined 26 per cent in one month.

A section of the broking community said the price band that has been fixed is high.

“The Government is behaving like a private promoter wherein they want to make as much as money as they can through this last divestment,” said a broker.

Through the NMDC public issue the Government will offload 33.2 crore shares or 8.4 per cent stake.

As on December, the free float of NMDC is 1.62 per cent, of which, 1.25 per cent is held by insurance companies and 0.12 per cent by mutual fund.

The NMDC follow-on public issue opens on Wednesday and closes on Friday. Retail participants will be given a 5 per cent discount to the price band.

The retail investors have been allotted 35 per cent of the shares on offer, high net worth investors have 15 per cent and qualified institutional buyers have 50 per cent.