Stocks

Broker's call: NMDC (Buy)

| Updated on October 01, 2019 Published on October 02, 2019

Emkay Global

NMDC (Buy)

CMP: ₹96.4

Target: ₹121

The Central Government has modified the Mineral (Mining by Government Company) Rules, 2015, by a notification issued on September 27, 2019.

According to the existing rules, the State Government, upon receiving an application for the renewal of a mining lease by a government company, “may, for reasons to be recorded in writing, extend the period of mining lease for further period up to 20 years at a time.” In the new amendment, the word “may” has been replaced with “shall”, thus removing any uncertainty regarding the renewal of lease as seen by NMDC in the case of Donimalai.

While the Centre and Karnataka State are negotiating the renewal of the Donimalai mining lease, we believe that with this action, the Central Government has clearly passed on the message that the renewal of any of the government company mines in the future will not be put in jeopardy by any action of the State government(s).

This notification is positive for NMDC in the near-term, especially as several of its mines are coming up for renewal over the next two years. This saves the Kumaraswamy mines from further action by the State Government of Karnataka as it is due for renewal in October 2022

Published on October 02, 2019
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