NMDC shares fall 3% after Q4 profit drop, OFS FY22

NMDC shares fall after Q4 profit drop and OFS plan

NMDC shares came under pressure after two separate triggers hit sentiment: a sequential decline in quarterly profit and the government’s plan to sell a stake through an offer for sale (OFS). The stock fell about 2.8% after NMDC reported a 23% sequential drop in Q4 profit, even as the report noted higher yearly revenue and sales. Weak iron ore prices and rising costs were cited as key factors weighing on margins. In a separate development, NMDC also remained in focus as the Centre announced an OFS at a discounted floor price, a move aimed at raising divestment proceeds. The OFS-related headlines also coincided with a sharp move in the stock on the BSE.

What triggered the move in NMDC stock

The Q4 update pointed to a sequential profit decline of 23%, which pushed NMDC shares down around 2.8% in trading. The same update indicated that revenue and sales were higher for the full year, but the near-term focus shifted to profitability and margins. The reasons flagged were softer iron ore prices and rising costs, which typically compress operating performance for miners. Separately, the government’s stake-sale plan through OFS added an additional overhang, as such deals can influence near-term supply-demand dynamics for the stock. On Friday, NMDC shares were reported down 2.91%. In another market update, the stock was noted closing at ₹169.65, down 3.22% on the BSE.

Government’s OFS: size, price and expected receipts

The government proposed to sell over 21.95 crore shares, representing a 7.49% stake in NMDC, at a floor price of ₹165 per share. At this floor price, the OFS was expected to fetch around ₹3,700 crore for the exchequer. Another reported calculation put the OFS aggregate value (base size plus green-shoe option) at ₹3,621.78 crore. The 7.49% stake comprised a 4% base issue size with an option to retain an additional subscription of 3.49% under a green-shoe mechanism. This OFS was also described as the first CPSE OFS in the fiscal referenced in the report. Proceeds from the sale were linked to the government’s disinvestment target of ₹1.75 lakh crore set for FY22.

Offer structure and timeline shared by the company

NMDC said the OFS would take place during trading hours on a separate window of the stock exchanges. The offer window was reported as opening at 9:15am and closing at 3:30pm. The government, acting through the President of India and represented by the Union Ministry of Steel, was identified as the promoter. As per the details, the promoter proposed to sell up to 11,72,24,234 equity shares, representing 4% of the paid-up equity share capital. It also had an option to additionally sell 10,22,78,144 equity shares, representing 3.49%, if there was oversubscription. The OFS opened on Tuesday (6 July 2021) for non-retail investors, while both retail and non-retail investors could participate on Wednesday (7 July 2021), with non-retail investors having the option to carry forward unallotted bids.

How the floor price compared with the market

The floor price for the OFS was set at ₹165 per equity share. One report described this as a nearly 6% discount to the prior close, while another quantified it as a 5.88% discount to NMDC’s BSE closing price of ₹175.30 on Monday (5 July 2021). Around the time of the announcement, NMDC was quoted at ₹173.75 on the BSE at 10:39am, down ₹1.65 or 0.94%. On the NSE, it was at ₹173.50, down 1.75 or about 1%. A separate market note also mentioned that at a price near ₹174, NMDC’s market capitalisation stood at ₹51,110 crore.

Earlier NMDC divestment examples cited in the reports

The broader set of updates also referred to earlier divestment transactions in NMDC. In one instance, the government invited bids from merchant bankers to assist the sale of a 10% stake, after which NMDC was reported to have plunged over 2%. Another report said the government successfully divested 2.52% of paid-up capital for about ₹1,200 crore through the OFS mechanism. That ₹1,200 crore included about ₹980.05 crore from non-retail investors and about ₹232 crore from retail investors. The floor price in that issue was ₹153.50 per share, and a 5% discount on the cut-off price was offered to retail investors to encourage participation. Following that transaction, the Government of India’s shareholding in NMDC was reported to have fallen from 74.94% to 72.42%.

Another OFS plan: 1.5% base stake at ₹153.50

A separate OFS-related update said the government planned to offload 1.5% of its equity stake in NMDC, with a floor price of ₹153.50 per share. The sale of 1.5% was expected to fetch ₹750 crore, according to a source cited in the report. The same plan included a green-shoe option to retain oversubscription up to another 1.5%, which could take the total divestment to 3% and raise close to ₹1,500 crore. That report also said the floor price implied a 5% discount to the BSE close of ₹161.85. On the day the non-retail OFS opened in that episode, NMDC shares were reported down as much as 4.8% to ₹154.10, and it was described as the biggest intraday percentage drop since December 18.

Key numbers at a glance

Market impact and why investors tracked these updates

The profit-related trigger centred on a sequential decline and margin pressure, with weaker iron ore prices and higher costs cited as headwinds. The OFS-related trigger was more mechanical: a large block of shares offered at a discounted floor price can influence trading behaviour around the offer window. The disclosures also provided clarity on timings, bidding windows, and the split between non-retail and retail participation. For the government, the OFS proceeds were positioned as part of the broader divestment programme and the FY22 target of ₹1.75 lakh crore. For investors, the immediate data points were the floor price, discount to the prevailing market price, and the size of the stake on offer. The stock’s moves mentioned in the reports ranged from about 1% intraday declines to over 3% drops on closing basis, depending on the day and the specific headline in focus.

Conclusion

NMDC’s stock reaction combined two threads: an earnings-driven reset after a 23% sequential Q4 profit drop and the government’s decision to sell up to 7.49% via OFS at ₹165 per share. The OFS structure, discount, and timetable were laid out through exchange filings and market updates. Going forward, investor attention is likely to remain on the final OFS outcome, including subscription levels and the eventual stake reduction from the government’s reported holding of 68.29% as of 31 March 2021.