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NMDC, a leading Indian mining company, has announced a significant move for its shareholders with the approval of a 2:1 bonus share issue. This means for every share held by an investor, they will receive two additional shares, effectively doubling their holdings in the company. This decision was revealed alongside the company's robust second-quarter financial results, demonstrating a strong performance in the current fiscal year.
The bonus issue is a strategic initiative aimed at increasing the liquidity of NMDC's stock. By increasing the number of outstanding shares, the company hopes to make its shares more accessible and affordable to a wider range of investors. This could potentially lead to greater trading activity and attract new investors, ultimately benefiting the company's overall market valuation. Furthermore, a lower share price can make the stock more appealing to retail investors who may not have the capital to purchase high-priced shares.
The positive impact of the bonus issue is further highlighted by the company's strong financial performance in the second quarter. NMDC reported a 23% year-on-year increase in its standalone net profit, reaching Rs 1,269 crore. This growth is attributed to the company's strong operational performance and favourable market conditions. Revenue from operations also witnessed a substantial surge, increasing by 20% YoY to Rs 4,807 crore. This demonstrates the company's ability to navigate challenging economic conditions and generate consistent profits.
Apart from the bonus issue, the NMDC board has also approved an increase in the company's authorized share capital to Rs 1,000 crore, divided into 1000,00,00,000 equity shares. This move signifies the company's confidence in its future growth prospects and its ability to capitalize on emerging opportunities in the mining sector. The record date for the bonus issue will be announced by the company in due course.
The announcement of the bonus issue and positive financial results has sparked interest among investors. However, the company's shares closed 1.05% lower at Rs 233.5 on the National Stock Exchange (NSE) on Monday. While the market reaction is initially muted, it is likely that the bonus issue will have a positive impact on the company's stock price in the long term, especially as investors take into consideration the strong fundamentals and growth potential of NMDC.
Source: NMDC announces 2:1 bonus issue as Q2 profit rises 23% YoY to Rs 1269 crore