Shares of iron ore mining companies NMDC Ltd and Moil Ltd rose up 5.3 per cent and 15.1 per cent, respectively, in morning trade, after the two companies informed the exchanges that they are likely to consider buyback of shares.
National Mineral Development Corporation Ltd (NMDC), India's largest iron ore miner, said its board will meet on 7 June 2016 to consider a proposal for buyback of equity shares.
The announcement was made in a BSE filing late on Thursday after market hours.
NMDC Ltd rose 5.3 per cent, after the company said its board of directors will meet on 7 June to consider a proposal of share buyback.
The company, however, did not elaborate on the number of shares that it plans to buyback.
Shares of Moil Ltd closed at Rs23.25 per share, up 11.70 per cent from the previous close, The stock rose as much as 15.1 per cent after the company informed the BSE on Thursday that its board will meet on 7 June to consider a share buyback.
''Moil Ltd has informed BSE that as per MOIL's code of conduct framed pursuant to Sebi (Prohibition of Insider Trading) Regulations, 2015, the trading window will remain closed from 3 to 9 June 2016 (both days inclusive) in relation to the board meeting scheduled on 7 June 2016 for consideration of buyback of shares,'' the company said in a notice to BSE.
''A meeting of the board of directors of the company will be held on June 07, 2016, inter alia, to consider the proposal for buy-back of the fully paid-up equity shares of the company of face value of Rs1 each,'' NMDC said in the BSE filing.
NMDC stock closed at Rs90.05, up Rs3.60 per share or 4.16 per cent. The stock traded around Rs90 on the BSE, up 4.11 per cent from its previous close. The stock hit a low of Rs88.80 and a high of Rs91 during the day's trading.
The development comes as the government, which owns 80 per cent in the mining company, is planning to sell 10 per cent of its stake through an offer for sale (OFS).
At the current prices of Rs86.45 apiece (Thursday's close), sale of 396.4 million shares through an OFS would fetch about Rs3,430 crore to the exchequer.
ICICI Securities Ltd, Citibank NA and SBI Capital Markets Ltd are among five merchant bankers shortlisted in May to assist the government in selling stake in the company.
The government has set a divestment target of Rs56,500 crore for the current fiscal year. Of this, Rs36,000 crore is estimated to come from minority stake sale in state-owned companies, and the remaining Rs20,500 crore from strategic sale in both profit- and loss-making companies.
Since 22 April, the shares of the company have fallen 5.54 per cent, while the benchmark Sensex has risen 5.3 per cent.