Coal India closes up nearly 40% on debut

It becomes the fourth largest firm in terms of market capitalization

A large pent up demand in its initial public offer (IPO) sent shares of Coal India (CIL) surging on its debut on the secondary equity market today, 4 November 2010. The stock settled at Rs 342.35 on BSE, a 39.73% premium over the IPO price of Rs 245. The stock settled close to the day's high of Rs 344.75. Retail investors have more to cheer as they got shares in the Coal India IPO at 5% discount to the IPO price.



The stock debuted at Rs 287.75, a 17.45% premium over the IPO price. The scrip hit a low of Rs 287.45. Volumes in the stock were a staggering 19.28 crore shares on BSE.

The strong debut helped Coal India emerge as the fourth largest firm, with a market capitalization of Rs 216240.58 crore.

The government mopped up around Rs 15500 crore from the Coal India (CIL) IPO. The IPO which was open for bidding between 18 and 21 October 2010, was subscribed 15.28 times.

Investors had made a beeline for shares of state-run CIL, putting in bids for a staggering 965.02 crore shares, compared with 63.16 crore shares on offer in the company's initial public offer. The non-institutional investors' (NII) category, which mainly consists of high networth individuals and corporates, was subscribed 25.4 times, the qualified institutional buyers (QIB) category was subscribed 24.7 times and the retail investors category was subscribed 2.31 times. However, the employee reservation category was subscribed just 10%.

Foreign institutional investors (FIIs) put in bids for a staggering 493.38 crore shares, compared with 28.42 crore shares reserved for the qualified institutional bidders category as a whole.

CIL, a Navratna public sector undertaking under the Ministry of Coal, Government of India, is the largest raw coal producing company as well as largest coal reserve holder in the world. CIL operated 471 mines in 21 major coalfields across eight states in India as of 31 March 2010, producing non-coking coal and coking coal of various grades for diverse applications. While non-coking coal is used in thermal power plants and the cement industry, coking coal is largely used in metallurgical industry. In FY 2010, about 91.6% of the total coal produced was of non-coking coal and the balance was coking coal.

CIL is largest coal producer in the country as well as in the world with its production for the year ended March 2010 (FY 2010) at about 431.26 million tonnes, which represents 82% of India's coal production. Further, the company is also the largest coal reserve holder in the world as of 1 April 2010, with about 18862.9 million tonnes of total reserves and 64218 million tonnes of total resources. India is the world's third largest producer and consumer of coal, given strong growth in economy.

Consolidated sales of the company for the fiscal ended March 2010 was higher by 14% to Rs 46689.29 crore and the net profit was up by 142% to Rs 9833.70 crore, albeit on a lower base.