NMDC Steel- disinvestment opportunity

NMDC Steel is a newly formed entity post its demerger from mining giant NMDC Limited, located at Nagarnar, Chhattisgarh

NSL is expected to have a production capacity of 3 million tonne per annum (MTPA)

The government last month received multiple preliminary bids for the privatisation of NMDC Steel. Currently, the government holds a 60.79% stake in NSL

Government Gets Multiple EoIs For Privatising NMDC Steel (outlookindia.com)

Plant will get commissioned by April 2023. Total capex for steel plant will be ₹25,000 crore, ₹21,000 crore already incurred. NMDC will buy 10% stake in NMDCSteel

Considering the value of the plant to be around 17- 21 k crores, the rough book value comes to 57 Rs to 71 Rs per share. Also considering that NMDC steel is about to be privatized, private steel companies usually trade at 1.5 to 2 times its book value. Tata steel currently trades at 1.2 times its book value and JSW trades at 2.3 times its book value. So at the current price of 35, NMDC steel looks undervalued

Also NINL was sold by government for 12,000 crore which was a 1.1 MT plant.So NMDC steel plant being new and located close to the iron ore supply and having a capacity of 3 MT, might get sold for 3 times that? Can someone throw some light on it? If that’s the case the value comes to 100 Rs per share.

Please add on to the thread…

Disclosure :Invested


There was a really good write up on NMDC steel by one of our members ViralP …Adding that here

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Tata group in July last year had completed the acquisition of 93.71 per cent in Neelachal Ispat Nigam Limited (NINL) through its listed step-down subsidiary, Tata Steel Long Products.

Tata Steel Long Products. was declared the winning bidder for the one million tonne (mt) NINL, an asset owned by central and state public sector undertakings, in a process run by the Department of Disinvestment & Public Asset Management (DIPAM), for a consideration of ₹12,100 crore.