National Mineral Development Corporation - NMDC is Coming out with its FPO on March 10. The issue is open from March 10 - March 12. The Promoter, Government of India, is to announce the price band on March 9, one day before the issue opens.
Let us do some number crunching on its past performance, so as to arrive the expected price band. For FY09, the total income of the company was at Rs. 8,575 crores with PAT at Rs. 4,372 crores, resulting in an EPS of Rs.10 with a Book value of Rs. 29. For FY10, the EPS estimates are at Rs.10 and book value of Rs. 39.
The other large cap stocks in this sector are Sesa Goa and GMDC which quote at 19 P/E and 18 P/E, respectively. Sesa Goa at Current price quotes at Price to Book Value of 7 and GMDC at P/BV of about 4.
Hence going by these numbers, NMDC between 250-270 would be a reasonably price to apply.
Govt may fix the price band closer to 300, which would be premium to other companies in the sector.
It is ok to apply, since govt won't allow the price to fall below the FPO price.
Yes, it seems ok around Rs.300.
what will be the listing price 300?
The stock is quoting around 400 now. After the issue price is announce, it would come down.
The govt would try to keep up the price around these levels.
NMDC FPO price fixed at Rs.300-Rs.350, which is above the expectation of sub-300 levels.
NMDC is subscribed 1.23 times a month ago, now its hovering around its lower price band of Rs 300. There may not be substantial gains in near future.