Coal India OFS opens for retail investors; shares extend fall
Shares of Coal India declined for the fourth straight session on Friday as the offer for sale (OFS) opened for retail investors under the green-shoe option. The government's OFS for up to 3% stake in Coal India got over-subscribed by institutional investors on Thursday.
At 10.40 am, the stock was trading with cuts at Rs 230, down 0.26% and was the top loser in the Nifty50 pack.
The scrip has declined by over 7% in the last four trading sessions.
The OFS was oversubscribed by the non-retail category by a whopping 346% on Thursday. The two-day OFS is expected to raise Rs 4,200 crore for the government.
The government proposed to sell up to 9.24 crore shares, representing 1.50% of the total paid-up equity as a base offer with an option to additionally sell 9.24 crore shares or 1.5% of the company equity in the event of oversubscription.
"The outlook for Coal India in FY24 appears bullish, primarily driven by robust power demand in India, supported by the growth of the manufacturing sector and rural electrification initiatives," Santosh Meena, Head of Research at Swastika Investmart said.
The OFS was oversubscribed by the non-retail category by a whopping 346% on Thursday. The two-day OFS is expected to raise Rs 4,200 crore for the government.
The government proposed to sell up to 9.24 crore shares, representing 1.50% of the total paid-up equity as a base offer with an option to additionally sell 9.24 crore shares or 1.5% of the company equity in the event of oversubscription.
"The outlook for Coal India in FY24 appears bullish, primarily driven by robust power demand in India, supported by the growth of the manufacturing sector and rural electrification initiatives," Santosh Meena, Head of Research at Swastika Investmart said.
"Given our positive sentiment towards the entire Public Sector Undertaking (PSU) space, we view any potential technical dips resulting from news about OFS as attractive buying opportunities," he added. He further recommends investors to consider participating in this OFS as the downside risk is limited at around Rs 225 level.
On the upside, a potential target level of Rs 275 is estimated.
"By taking advantage of this offering and carefully assessing the risk-reward dynamics, investors can potentially benefit from the expected positive momentum in Coal India's performance," Meena said.
The floor price for the offer has been fixed as Rs 225, a 6.7% discount to Wednesday's closing price of Rs 241.20. About 10% of the offer is reserved for retail investors.
Non-institutional investors who place bids can flag their willingness to carry forward their un-allotted bids to Friday for allocation to them in case the retail category stays unsubscribed.
The correction in this largecap stock with a market capitalisation of more than Rs 1.40 lakh crore was amid volumes of 3.9 million shares.
Coal India’s shares have risen 18% in a year according to Trendlyne data and have outperformed the Nifty50 which has given an 11% return during this period.
The state-run company reported an 18% decline in its consolidated net profit for the quarter ended March 31. The profit after tax (PAT) stood at Rs 5,528 crore for the fourth quarter of FY23 versus Rs 6,715 crore clocked in the corresponding quarter of last fiscal. Its revenue from operations stood at Rs 38,152 crore in Q4 FY23, up 17% YoY as compared to Rs 32,709 crore in Q4 FY22.
Brokerage firm Nuvama initiated a 'buy' on Coal India post Q4 earnings with a price target of Rs 365.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
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