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Want to Park Your Hard Earned Money - Invest In NMDC with Regular Return In the Form of Dividend

The Indian PSU, NMDC is India'slargest iron ore producer and recently ventured into diamond exploration also. The cash rich company came out with its Q1,FY17 result with 711.34 Cr which is lesser than the corresponding year profit. The revenue also went down due to suppressed price point of iron ore. The main reason of lower profitability is the contribution from other income as company bought back more than 80 Cr share from government  which is 20% of total share at a price point for INR 95. On top of that company also gave 855%  dividend to investor. The cash position of the company went down drastically but at the same time, the current share price of INR 101.35, is an opportunity for investor to jump in and start accumulating during market selloff days.

The share buyback will have positive impact on P/E as well as EPS. The Indian economy is on verge of growth which will be led by infrastructure given the fact that government already cleared more than $10 Bn projects in Infrastructure. The steel sector is gaining ground and thanks to Minimum Import Price imposition by government to mitigate impact of steel dumping in India.

The passage of GST by Indian parliament is also going to lift the sentiments of Industry and it seems that revival of many stall project is going to take off.

It is advisable that investor should pick the share during sell off days and keep it for minimum two years and am confident that company will keep offering good dividend and the revival of economy will revive the share price of the company.
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About Devendra Prasad

20 years plus industry veteran of domestic and international ICT domain with the expertise in Business, Technology, Strategy and Analysis. Specializes in forecasting impact analysis, trends and recommendations for Investments, Technology and Regulations.
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