NMDC Approves Bonus Share Issue Of Two For One Held

NMDC Ltd., India’s largest iron ore producer, has some big news for its shareholders. The company has approved a 2:1 bonus share issue, meaning for every share you hold, you’ll get two additional ones. This is a rare move from NMDC, showing the company’s first bonus issue in 16 years. 

What’s the Plan?

The company plans to issue 586 crore fully paid-up bonus shares, each with a face value of Rs.1. These bonus shares will hit eligible shareholders’ accounts by January 10, 2025. To make this happen, NMDC Ltd. will tap into its reserves, Rs.103.4 crore from its Capital Redemption Reserve and Rs.482.7 crore from the General Reserve.

In another development, the company is also increasing its authorized share capital from Rs.400 crore to Rs.1,000 crore, pending approvals. That’s to accommodate the expanded equity base.

Q2FY25 Financials

On the financial front, NMDC Ltd. reported a mixed bag. Its net profit rose 17% YoY to Rs.1,196 crore, but it missed analysts’ expectations of Rs.1,432 crore. Similarly, revenue jumped 23% YoY to Rs.4,919 crore, though it fell short of the estimated Rs.5,058 crore.

Operating profit (EBITDA) grew by 16% YoY, coming in at Rs.1,386 crore, while margins slipped to 28.2%, down from 29.7% last year. Not quite the performance investors were hoping for.

How the Market Reacted

Despite the bonus announcement, NMDC’s stock took a hit. Shares closed 1.15% lower at Rs.232.95 on Monday and dropped another 4% today, on Tuesday, making it the biggest loser on the Nifty Metal Index. Looks like the market was unimpressed with the Q2FY25 miss.

Conclusion: While the bonus issue is exciting, NMDC’s quarterly numbers show there’s work to be done. Still, the bonus shares are a good way to reward loyal investors, if you’re holding NMDC stock, you’ve got something extra to look forward to!

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.