Coal India soars 40% on debut

Surpassing all expectations, the stock price of Coal India soared 40 per cent from its issue price of Rs 245 on the first day of trading on Thursday to the benefit of more than 1.5 million investors.

Gains for retail investors were higher, as they were allotted shares at Rs 232.75, a discount of 5 per cent on the issue price. “Retail investors have made a lot of money from the Coal India issue. This will definitely help increase their participation in the secondary market,” said Motilal Oswal, chairman & managing director, Motilal Oswal Financial Services.

Coal India’s shares opened at Rs 287.75 on the Bombay Stock Exchange and maintained an upward momentum throughout the day on frenzied buying by institutional investors. It finally closed at Rs 342.30, near the day’s high of Rs 344.75. On the National Stock Exchange, the company’s stock touched a high of Rs 344.90 and closed at Rs 341.90.

After a stellar debut, Coal India’s total market capitalisation stands at Rs 2,16,240 crore (roughly $48.79 billion) — the fourth highest in India after Reliance Industries, ONGC and State Bank of India. Among its global peers, Coal India is now the second-highest valued firm after China Shenhua Energy, which has a market capitalisation of $87.35 billion, according to BS Research Bureau.

Coal India was the top traded counter on both the exchanges, with a combined turnover of Rs 21,970.43 crore on Thursday. The average daily turnover on the two exchanges was Rs 22,768 crore in October.

Around 671 million shares of Coal India changed hands on Thursday, more than the company’s free-float of 631.64 million shares.

“The demand for the stock (results from) a combination of attractive pricing and global money inflows,” said Dharmesh Mehta, managing director of institutional equities at Enam Securities, one of the lead managers of the Coal India issue.

“While the stock looks a bit expensive at present levels, investors with a two-year horizon can still buy it,” he added. Mehta sees the floor for the stock at around Rs 300.

Coal India’s initial public offering, through which the Indian government raised more than Rs 15,100 crore by selling 10 per cent stake, was the biggest ever public issue in India. It was subscribed more than 15 times the shares offered.

Coal India’s spectacular performance on the bourses augurs well for the government, which aims to raise Rs 40,000 crore in this financial year from shedding stake in its companies.

“We definitely expected a good listing for Coal India,” said Disinvestment Secretary Sumit Bose, who is spearheading the government’s stake sale programme. “This kind of response will have a positive impact on retail participation in future government issues,” he added.

Power Grid’s follow-on public offering, which aims to mop up over Rs 8,000 crore, will be the next public sector issue to hit the market on November 9.