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GMDC shares jump 10% after Edelweiss initiates coverage with 'buy'

GMDC shares jump 10% after Edelweiss initiates coverage with 'buy'

GMDC shares jump 10% after Edelweiss initiates coverage with 'buy'
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By CNBC-TV18 Mar 12, 2019 11:50:26 AM IST (Updated)

Shares of Gujarat Mineral Development Corp. Ltd (GMDC) surged nearly 10 percent on Tuesday after Edelweiss Securities initiated coverage on the stock with a "buy" rating and a target price of Rs 105 per share.

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GMDC shares jumped as much as 9.8 percent to Rs 94.50 per share intraday on the NSE. On the BSE, the GMDC stock price rose to Rs 94.25 per share, up 9.9 percent from its previous close.
Edelweiss said the company is on the cusp of performance improvement led by volume ramp up despite little support from prices. "We see imminent volume uptick post-production ramp up at new mines, despite stagnant prices, resulting in free cash flow accretion of INR11.7bn (~43% of current market cap) through to FY21E," the brokerage noted.
Edelweiss believes the valuation is attracting, with the stock trading at the lowest end of its 8-year EV/EBITDA band and discount to other coal companies. The brokerage sees slow volume ramp up, dip in international coal prices and unrelated investments as risks.
At 10.47 AM, the GMDC shares was trading 7.46 percent up at Rs 92.15 per share on the BSE, and 6.86 percent up at Rs 91.90 per share on the NSE. The BSE Sensex was up 1.18 percent at 37,492.98 and the Nifty 50 gained 1.17 percent to 11,299.20.
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