Government company National Mineral Development Corporation (NMDC) has made a huge profit in the second quarter of the current financial year. After this result, the company has decided to give bonus shares to its shareholders in the ratio of 2:1. This means that investors will get two additional shares in exchange for every one share. The company will inform about the record date for the bonus issue later.
Profit and revenue of the company
NMDC’s standalone net profit in the second quarter reached Rs 1269 crore, showing a growth of 23 percent compared to last year. Apart from this, the company’s revenue from operations also showed a growth of 20 percent to Rs 4807 crore.
Share Status
About an hour after the market opened on Tuesday, the share price was around Rs 227. It has fallen by more than 2 percent compared to Monday. In the first hour, its price had come down to Rs 222. However, later it showed an increase.
What does the company do?
NMDC is a government company which comes under the Ministry of Steel. It is India’s largest iron ore mining unit. NMDC fulfills about 20 percent of the country’s demand for major steel manufacturing raw materials. The company’s market cap is Rs 66.78 thousand crore.
Why are bonus shares issued?
Bonus shares are issued to increase the liquidity of the company stock and make it affordable for investors. During this time, the share price goes down. If a share is worth Rs 100 and the company announces bonus shares at 1:1, it means that the shareholder will have double the number of shares but the price of one share will be halved. This does not make any difference to the total price.