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CIL falls below IPO price on share sale concerns

The stock touched a record low of Rs 238.35 today

Samie Modak  |  Mumbai 

The Ltd (CIL) stock on Friday slipped below its initial public offering (IPO) price, after the government appointed merchant bankers to manage the company's share sale. In intra-day trade, the stock touched a record post-listing low of Rs 238.35, before recovering about five per cent to settle at Rs 250.5 on BSE.

In October 2010, the Centre had sold 10 per cent stake in CIL through an IPO, at Rs 245 a share. To narrow its fiscal deficit for this financial year, the government is considering selling another five per cent stake in the coal miner.

On Thursday, the government appointed seven bankers, including Goldman Sachs, Credit Suisse and Deutsche Bank, to manage the in the company.

Experts said concern on further disinvestment in CIL by the Centre was weighing on the stock price. Typically, the market hammers the stocks of public sector undertakings on of disinvestment. Government-run companies, including NTPC, Hindustan Copper and Steel Authority of India Ltd, have seen erosion in their market capitalization following of disinvestment.

is going through the same fate as other disinvestment candidates. The stock could continue to remain under pressure till the time its share-sale concludes,” said a domestic broker.

CIL shares have come off a third from their peak of Rs 386 in September 2012. However, they have fallen about 10 per cent in the past month. At current market prices, the Centre might fetch about Rs 8,000 crore by selling five per cent stake in the company.

This financial year, the government plans to raise Rs 40,000 crore through disinvestment. So far, it has managed to raise about Rs 1,000 crore by selling shares in various companies, including Hindustan Copper and MMTC.

First Published: Fri, August 30 2013. 23:29 IST