×
Home Companies Industry Politics Money Opinion LoungeMultimedia Science Education Sports TechnologyConsumerSpecialsMint on Sunday
×

Coal India’s $3.5 bn IPO fully covered

Coal India’s $3.5 bn IPO fully covered
Comment E-mail Print Share
First Published: Tue, Oct 19 2010. 05 36 PM IST
Updated: Tue, Oct 19 2010. 05 36 PM IST
New Delhi: State-run Coal India’s initial public offering, expected to raise as much as $3.5 billion, was fully covered on Tuesday, the second day of the offer, stock exchange data showed.
The offering, the largest in India’s corporate history, had received bids for over 637 million shares by 3:30pm, according to exchange data. Coal India is selling more than 631.6 million shares in its IPO.
Morgan Stanley, Citigroup, Kotak Mahindra Capital, Enam Securities, Deutsche Bank and Bank of America-Merrill Lynch are managers on the offer.
Stock exchange data at 1.00pm, showed the overall offer had been covered 0.78 times of the more than 631.6 million shares being sold in the IPO. Most of the bids were at the top end of the price range.
The offering is expected to draw billions of dollars from global investors who have been pouring money into emerging markets such as India in recent months, in search of higher returns.
A Reuters poll of fund managers last week had found strong interest in the offer near an estimated price of around Rs250 a share, given the miner’s dominant market position in an economy growing at 8.5% and attractive valuations.
Coal India’s IPO closes on Wednesday for institutions and on Thursday for retail investors. Large IPOs in India typically see the heaviest subscription towards the close of the offering.
STRONG OUTLOOK
Bhattacharyya said the firm’s coal production is expected to be close to the set target of 460.5 million tonnes in the current fiscal year, which would be up 6.8 percent from a year earlier. He also said the world’s largest coal miner was unlikely to add new mines this fiscal year.
Coal India, based in the eastern city of Kolkata, produced 431 million tonnes in 2009/10 and accounts for nearly 80 percent of coal output in Asia’s third-largest economy.
It made a net profit of Rs9,830 crore ($2.2 billion) in 2010 fiscal year on revenue of Rs52,590 crore.
It expects profits to rise by a quarter this fiscal year, driven by demand for electricity in India, three-quarters of which is fueled by coal, and which is forecast to grow 11% a year.
At the top of its price range Coal India would be valued at 15.7 times trailing earnings.
China’s Shenhua Energy trades at 16 times trailing earnings, while smaller Indonesian peer Adaro Energy has a ratio of 20 times. US miner Peabody Energy trades at 25 times earnings.
The Indian government is selling a 10% stake in the world’s largest coal miner as part of India’s broader effort to divest stakes in roughly 60 companies in the next few years.
Brokerages have estimated that Coal India could see upside of roughly 30% from its IPO valuation range, and said Coal India deserves a premium to global peers due to lower earnings volatility, a large undeveloped resource base and potential to increase prices.
Morgan Stanley, Citigroup, Kotak Mahindra Capital, Enam Securities, Deutsche Bank and Bank of America-Merrill Lynch are managers on the offer.
Comment E-mail Print Share
First Published: Tue, Oct 19 2010. 05 36 PM IST
More Topics: Coal India | Stocks | Markets | BSE | IPO |