NMDC Share Price Fall 7.1%: Karnataka Government Looks to Increase Iron Ore Duty
Posted by : sachet | Wed Dec 18 2024
The shares of state-owned NMDC Ltd. recorded a low of Rs. 211.30 per share on December 18th, 2024, which was a fall of approximately 7.1% from the previous day’s close of Rs. 227.51. The selling pressure was seen following the media reports that the Sri Siddaramaiah-led Karnataka government is considering an increase in the iron ore mining duty.
Factors Behind NDMC’s Fall
Earlier this month, the State Cabinet gave a nod to the Karnataka (Mineral Rights and Mineral Bearing Land) Tax Bill, 2024. The bill was approved to allow the government to levy and collect taxes on the exercise of mineral rights and mineral-bearing lands in the state.
The states are now allowed to collect mining taxes from 2005 retrospectively after the Supreme Court’s approval. The proposed law is expected to fetch a revenue of Rs. 4,207.95 crores and Rs. 505.9 crores from taxes on land-bearing minerals. Like NDMC, the share prices of SAIL and JSW Steel have also plummeted amid such legal trends.
Other Developments
The company had announced the issuance of bonus issue on Tuesday, December 18th. The company has set Friday, December 27th as the “record date” to determine the eligibility of the shareholders for issuance and allotment of the abovementioned bonus shares. It has already received in-principal approval from BSE and NSE for the bonus issue.
About NDMC
NMDC is a ‘Navratna’ public-sector enterprise, operating under the Ministry of Steel, and owns and operates highly automated iron ore mines in Karnataka and Chhattisgarh. Karnataka contributes approximately 35% of the company’s production mix and, hence is important for its operations.
NDMC Financial Performance
The company announced its quarterly results for June to September 2024 in the second week of November. It recorded a 17% rise in the net profits at Rs. 1,195.63 crores as compared to Rs. 1,024 crores in the same quarter for the previous year.
| Period Ended | 31 Sep 2024 (in Cr.) | 31 Mar 2024(in Cr.) | 31 Mar 2023(in Cr.) | 31 Mar 2022(in Cr.) |
| Revenue | 4,919 | 22,232 | 17,667 | 25,965 |
| Operating Income | 1,386 | 7,294 | 6,054 | 12,626 |
| Net income | 1,205 | 5,575 | 5,601 | 9,429 |
| EPS | 4.13 | 19.01 | 19.12 | 32.17 |
The sharp price decline in NMDC’s share price reflects investor’s concerns over the recent proposal of the Karnataka government’s proposed iron ore duty hike, which could impact the costs and margins of the company. While solid financial performance and issuance of bonus shares reflect the company’s resilience, regulatory challenges may further pressure the stock performance.
