The Street is expecting the Coal India share to list between Rs 280 and Rs 290, at a premium of 15-18% to its issue price of Rs 245 per share. Analyst and market experts expect Coal India shares to put up a good show because of its attractive pricing, strong fundamentals and pent up investor demand for its initial public offering (IPO).
Coal India?s IPO, the country?s largest ever, had generated huge investor response with the issue receiving 15 times more bids than the shares on offer. The Rs 15,000-crore IPO garnered demand worth about Rs 2.3 lakh crore ($50 billion)
The institutional category was subscribed 24.7 times, the high net worth individual (HNI) segment was subscribed 25.4 times and the retail category was subscribed 2.3 times.
Market experts say that the stock is expected to see huge amount of activity on listing as leveraged HNI and retail investors will look to cash out if they are making good listing gains, while institutional investors will look at buying the stock as they would have got only a fraction of their application amount.
?There could be selling pressure from investors who have bought through leverage. At the same time, there are a lot of FIIs who will look at buying as they couldn?t get the intended allocation,? said Ambareesh Baliga, vice-president, Karvy Stock Broking.
?There could be selling from retail and HNIs but institutional buying will absorb that,? said Prasad Baji, senior vice-president at Edelweiss Securities.
?Institutional selling won?t be much unless you see price like Rs 325 or Rs 350, which is not expected.? The stock on Wednesday was commanding a grey market premium of Rs 42, 17% more than its issue price.
?There is expectation that the stock could find its way into the different benchmark indices, including MSCI Index. This will keep the interest in days to come,? said Vivek Mahajan, head-research, Aditya Birla Money.
Meanwhile, gain in share prices of global coal and commodity companies could give a further boost to Coal India stock. The share prices of top global coal companies have surged an average 12% since October. China Shenhua Energy, the country’s largest listed coal producer, has gained about 18% since October 1, while Yanzhou Coal Mining has surged 42%.
The US stimulus could result in further weakening of the dollar, which will firm up commodity prices, said Mahajan. ?This could help commodity companies like Coal India,? he said.
At the issue price, the company will be the seventh largest company in the country in terms of market capitalisation behind NTPC, which has a market cap of Rs 1.59 lakh crore. Double-digit listing gains could see the company top NTPC in terms of market capitalisation.