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Published on Friday, January 30, 2015 by Dilip Davda | Modified on Wednesday, July 22, 2015
Coal India that made history with its mega IPO of Rs. 15199 crore in October 2010 has once again done a remarkable job. Its Offer for Sale of 631636440 equity share of Rs. 10 each (including green shoe option) at a floor price of Rs. 358 per share against its previous day closing of Rs. 375.15 met with grand success. This offer contained 20% reservation for Retail investors with a 5% discount on the final price. Retail quota was for 126327288 shares while non-retail quota was 505309152.
Against total quantity of 631636440 shares, the offer received bid for 675241899 shares resulting in oversubscription at an average price of Rs. 358.05. This will fetch Government of India around Rs. 22600 crore. Against retail quota of 126327288 shares, it got bids for 55647668 shares resulting in 0.44 times subscription while in non-retail quota of 505309152 shares, it got bids for 619594231 shares resulting in oversubscription to the tune of 1.23 times. According to market sources, LIC has applied for almost 50% of the quota and FIIs have pumped in around Rs. 5500 crore. This counter closed at Rs. 360.05 today and the allotment for this offer might get settled at little over floor price. Shares are likely to be transferred latest by 3rd February 2015 in investor’s demat account.
Well, despite all odds, Government’s decision of fixing a floor price at Rs. 358 i.e. at a discount of around 4% of previous day’s closing has set an example of pricing the offer in investor friendly manner. With this astounding success of mega OFS, other OFS from ONGC, PFC, RCF, NMDC etc are now likely to follow soon and may hit the market before the fiscal budget.
With Coal India’s offer, Government has received nearly half of its target of Rs. 43225 crore divestment plans.
From this offer, primary market may get leads for investor friendly pricing of IPOs as the recent IPO of Monte Carlo has done the damage with discounted listing and poor performance thereafter.
DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor prior to making any actual investment decisions, based on information published here. Any reader taking decisions based on any information published here does so entirely at own risk. Investors should bear in mind that any investment in stock markets are subject to unpredictable market related risks. Above information is based on RHP and other documents available as of date coupled with market perception. Author has no plans to invest in this offer.
(SEBI registered Research Analyst-Mumbai).
About Dilip Davda
Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.
Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detail fundamental and financial analysis of companies coming up with IPO helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.
Email: dilip_davda@rediffmail.com
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