Coal India IPO debuts on Oct 18th
By siliconindia   |   Wednesday, 13 October 2010, 22:35 IST
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Bangalore: The government on Tuesday decided to price Coal India's IPO in the range of Rs 225-245 a share for divesting its 10 per cent stake. The government is aiming over Rs 15,000 crore (Rs 150 billion) through the largest ever public offering in India. According to analysts, the IPO is attractively priced and investors should invest in it. The share sale is part of India's broader effort to divest stakes in roughly 60 companies in the next few years. Ambareesh Baliga, vice president of Karvy Stock Broking said "The pricing is much better than what we were expecting (which was) 260 rupees at the upper end and the response from institutional investors is expected to be very good." Chairman Partha S Bhattacharyya said, "The price band is fair. It is neither too high nor too low. It could help raise anywhere between Rs 13,909 crore (Rs 139.09 billion) and 15,154 crore (Rs 151.54 billion)." The IPO opens on Oct. 18 and closes on Oct. 21, with listing in Mumbai set for Nov 4. Retail investors and staff will get a 5 percent discount, Coal Minister Sripraksh Jaiswal said. Analysts said Coal India, the world's largest coal company, was the best play on India's rising coal deficit, calling it an attractive bet at the price band of Rs 225 to 245 a share. Coal powers 75 percent of India's electricity output and demand is expected to grow about 11 percent a year. India at present faces a peak-hour power deficit of nearly 14 percent.Hence, plans to triple its generation capacity over the next decade. Coal India, which sits on estimated 64 billion tonnes reserves, sells its coal at 50 percent cheaper rates than the prevailing global prices. The company had clocked a profit of nearly Rs 10,000 crore (Rs 100 billion) in the last fiscal with Rs 52,000 crore (Rs 520 billion) turnover. Coal India will make its debut on the bourses on November 4 and is expected to trade at a premium from the issue price.

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