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India’s Largest IPO – Coal India Price fixed at Rs 245

Coal India’s shares will list on  the 4th November 2010 and allotments are likely to be finalised by 1st November.

The Government has announced that it will be fixing the price of Coal India Ltd’s (CIL) initial public offering (IPO) at the upper end of the price band at Rs. 245 per share.This decision was taken yesterday in view of the high demand the IPO witnessed.The IPO of Coal India was oversubscribed by more than 15.28 times. The Coal India IPO issue recieved bids for almost US$ 53 billion worth of equity shares as against issue size of US$ 3.5 billion.

This is one of the biggest IPO’s to ever hit the Indian Capital Markets . The portion for Qualified institutional buyers (QIBs) for whom there was a reservation of 50 per cent of the shares has been oversubscribed by as much as 24.7 times.The retail segment saw more than 16.45 lakh applications received, which is a new record and the highest that any PSU’s IPO has so far attracted.
Coal India IPO Price
The government has has stated that the amount of Rs. 15,200 crore that it will mop from this disinvestment will be utilised for infrastructure and development programmes in the rural areas of India.

Coal India Limited is the holder of the world’s largest coal reserves and also the largest producer.It is ranked as one of the lowest cost coal mining firms in the world. The issue price of Coal India is far lower than what it’s global peers are valued at and this has prompted the huge retail and FII interest in the company. Experts and analysts expect Coal India to list above Rs 300 on it’s day of listing. In the grey market the shares are already trading and deals are being made at a premium of Rs 30 – Rs 40 per share.

Some experts believe Coal India’s fair value is at least Rs 316 per share as coal prices are unlikely to come down in India.This assessment of fair value of Rs 316 is based on the Discounted Cash Flow valuation.At an issue price of Rs 245 per share , Coal India will enjoy a valuation of more than US$ 35 billion, which will make it the seventh highest among India’s listed firms.

Abhay N

Author : 

Abhay is the founder and managing editor of India Microfinance. He is passionate about microfinance, financial inclusion and social entrepreneurship in India.

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