The government on Thursday set the floor price of Coal India at Rs 358/share for an offer for sale (OFS) in which it plans to sell 5 percent stake in the firm.
The government on Thursday set the floor price of Coal India at Rs 358/share for an offer for sale (OFS) in which it plans to sell 5 percent stake in the firm.
The share closed at Rs 374 today, implying a 4.5 percent discount from the last closing price.
The government added that it may sell another 5 percent in the issue via the greenshoe option. A greenshoe option endows the issuer with an option of selling additional stake in case there is enough demand.
A 5 percent stake sale would fetch the government close to Rs 11,300 crore; and double that in case the full 10 percent stake goes through.
Coal India shares have feel about 4 percent from a peak of about Rs 400 in the past few days amid news flow that the issue was coming soon. There were reports today that said the government has asked regulator Sebi to keep its guard up to see if there is any manipulation in the counter.
"The issue is in line with our expectations. It provides a good opportunity for investors to invest in the largest coal mining company in the world at a discount [to market price]," stock broker Deven Choksey of KR Securities told CNBC-TV18. "Institutional investors will likely be keen to apply."
Coal India, which has a virtual monopoly on coal mining in the country, is a fundamentally sound company and with the government pledging to double its production by 2019, the stock makes for a good long-term investing opportunity, Choksey added.
However, Taran Bhanushali, AVP – Research, IIFL, said the stock may underperform from tomorrow onward, and may test Rs 360 levels, where it may stabilize.
Coal India stock price
On January 29, 2015, Coal India closed at Rs 375.15, down Rs 8.9, or 2.32 percent. The 52-week high of the share was Rs 423.85 and the 52-week low was Rs 240.50.
The company's trailing 12-month (TTM) EPS was at Rs 21.06 per share as per the quarter ended September 2014. The stock's price-to-earnings (P/E) ratio was 17.81. The latest book value of the company is Rs 26.04 per share. At current value, the price-to-book value of the company is 14.41.
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