NMDC shares down 7% as Karnataka government’s iron ore recovery plans weigh on sector

Shares of state-owned miner NMDC fell 7% on the NSE on Wednesday following media reports that the Karnataka government was considering raising duty on iron ore. It touched a low of 211.55.

A sell-off was seen amid strong volume as the shares traded around 2.50 on the NSE around 1:30 pm.

The Siddaramaiah-led Karnataka government has introduced a bill to tax mines and mining land at Rs. 20 to Rs. Proposes to levy a tax of up to 100 Money Control The report said. The proposed Act will provide Rs. 4,207.95 crore is expected to generate revenue and tax on land-bearing minerals will generate an additional Rs. 505.9 crore will be received.

Karnataka accounts for 78% of India’s total iron ore reserves and is a leading iron ore producer.

The news also had a negative impact on other stocks, as shares of JSW Steel, Jindal Steel & Power and Tata Steel were trading up to 2% lower around 1:30 pm.

India’s crude steel capacity is estimated to reach 300 million tonnes (mt) by FY30-31, taking iron ore requirement to around 435-445 mt and a 16% market share. A Motilal Oswal report published in early December said the NMDC is well positioned to handle this growing demand.

Motilal Oswal analysts said, “We maintain a ‘buy’ rating on NMDC with a target price (TP) of Rs 280 based on 6x Sep’27E enterprise value (EV)/earnings before interest, tax, depreciation and amortization (Ebitda). , in a note. “We maintain ‘Buy’ rating on NMDC with a target price (TP) of Rs 280, based on 6x Sep’27E enterprise value (EV)/earnings before interest, tax, depreciation and amortization (Ebitda),” MOFSL said. . A note.

Shares of NMDC have gained nearly 9% in the last 12 months, against 13% the Nifty has given in the same period. NMDC has seen its share price fall by 20% in the last six months.

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