The Hindu Business Line, Kolkata
Shares of Coal India will list on Thursday and analysts are of the view that it will be nothing short of a bumper debut.
Apart from expecting a double-digit premium on listing, some brokerages have even put “buy” calls on the scrip even before its listing.
“There is a lot of pent-up and unsatisfied demand, so we will see many investors looking to buy the shares from the open market,” said Mr Jagannadham Thunuguntla, Head of Equity at SMC Capital.
“There will also be selling pressure, depending on the listing premium, as investors will look at booking profits,” he added.
The issue, which was subscribed 15.2 times, got a phenomenal response from the retail investors as it got subscriptions for 38 crore shares against the 20 crore shares offered. The retail portion was subscribed 2.15 times. The QIB portion (FIIs and DIIs) was subscribed 24.7 times. Domestic institutions put in bids for 180 crore shares.
A research report by India Infoline has given a “buy” call on the company and said that they estimate the fair value at Rs 345 a share.
“Given the relatively stable earnings profile, CIL should trade at a premium to global peers. At our target price of Rs 345 per share, CIL's FY12 PE ratio would be18.5x, only a slight premium to the CY10E PE ratio of 17.4x for global coal producers.”
A Motilal Oswal report, apart from a buy recommendation, has quoted a target price of Rs 325 for the short term.
“The company has large cash balances, resulting in high treasury income, which constitutes approximately 17 per cent of adjusted earnings. Near term earnings growth to be driven by e-auction, cost efficiencies; washed coal remains a strong structural story.”
London's FTSE has included Coal India in its FTSE All-World Index and FTSE All-Emerging Index from November 5. FTSE had said on October 25 that in the All World Index, Coal India will be added to the Large Cap index.
A Reuters poll forecasts that Coal India will list with “double-digit gains” on its debut because of “strong demand from investors who received only a fraction of the shares they applied for in the IPO”.