The much awaited demerger of NMDC's Steel plant has received the board approval. The board has approved the scheme of arrangement which will see NISP, or, NMDC Iron & Steel plant in Nagarnar being demerged into NMDC Steel Ltd. In lieu of this demerger, NMDC's shareholders will receive 293 crore equity shares in NMDC Steel which is a 1:1 allotment. The face value of NMDC Steel is fixed at Rs. 10/share. Further, the shares of NMDC Steel will then be listed on the exchanges. The scheme is subject to regulator and shareholder approval. Analysts say this is a major value unlocking move for NMDC's shareholders as the market is not ascribing any value to the steel plant currently. The management had told ET NOW that the plant would be commissioned by Sept-Oct of this year. Any delay in the commissioning of the plant will be a negative. ICICI Securities says that there can be further value unlocking if NMDC or the government is successful in finding a divestment partner for the steel plant. It assigns a CWIP at a P/B of 0.8x which can lead to a value attribution of Rs. 55/share by FY23
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