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Business News/ Market / Stock-market-news/  NMDC surges 4.16%, Moil 5.28% on share buyback reports
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NMDC surges 4.16%, Moil 5.28% on share buyback reports

Shares of mining companies NMDC and Moil rose on Friday, a day after both companies informed the exchanges on Thursday that they are likely to consider buyback of shares

Photo: Aniruddha Chowdhury/ MintPremium
Photo: Aniruddha Chowdhury/ Mint

New Delhi: Shares of mining companies NMDC Ltd and Moil Ltd rose on Friday, a day after both companies informed the exchanges on Thursday that they are likely to consider buyback of shares.

India’s largest iron ore miner NMDC Ltd rose, after the company said in a BSE filing on late Thursday that its board of directors will meet on 7 June to consider a proposal of share buyback. The company, however, did not elaborate on the number of shares that it plans to buy back.

“A meeting of the Board of Directors of the Company will be held on June 07, 2016, inter alia, to consider the proposal for Buy Back of the fully paid-up equity shares of the Company of face value of Rs. 1 each," the company said in the BSE filing.

The development comes as the government, which owns 80% in the mining company, is planning to sell 10% of its stake through an offer for sale (OFS).

At the current prices of 90.05 apiece, sale of 39.64 crore shares through an OFS would fetch about 3,570 crore to the exchequer.

Shares of NMDC closed 4.16% higher at 90.05 apiece.

Five merchant bankers were shortlisted in May to assist the government in selling stake in the company. The merchant bankers included ICICI Securities Ltd, Citibank NA and SBI Capital Markets Ltd.

It’s a good time for the government to contemplate an OFS in NMDC as iron ore prices, to which the profitability of the company is closely linked, have risen sharply in international markets.

Proceeds from NMDC disinvestment will be part of the government’s total disinvestment target of 56,500 crore during this fiscal year. Of this, 36,000 crore is estimated to come from minority stake sale in state-owned companies, and the remaining 20,500 crore from strategic sale in both profit- and loss-making companies.

Meanwhile, Moil Ltd rose as much as 15.1%, a day after the company informed the BSE that its board will meet on 7 June to consider a share buyback. “Moil Ltd has informed BSE that as per MOIL’s Code of Conduct framed pursuant to SEBI (Prohibition of Insider Trading) Regulations, 2015, the Trading Window shall remain closed from June 03, 2016 to June 09, 2016 (both days inclusive) in relation to the Board Meeting scheduled on June 07, 2016 for consideration of buyback of shares," the company said in a notice to BSE. The stock closed 5.28% higher at 233.25. The benchmark Sensex closed flat at 26,843.03 points.

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Published: 03 Jun 2016, 10:23 AM IST
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