Coal India IPO opening on Oct 18

 

India's largest coal producing company Coal India (CIL) will open its initial public offering (IPO) for subscription on October 18, 2010. The company is offering 63.16 crore equity shares through the issue, which was an offer for sale by the President of India, acting through the Ministry of Coal, Government of India. The price band for one of the most eagerly awaited public issues has been fixed at Rs.225-245 a share and employees of Coal India and retail investors will get 5% discount to the issue price.

The offer shall constitute 10% of the post offer paid-up equity share capital of company. The government expects to raise over Rs 15,000 crore through the IPO, which will be largest ever amount raised by an Indian company via offering. The issue will close on October 21.

About Coal India Ltd:

Coal India Limited (CIL) - a Schedule 'A' 'Navratna' Public Sector Undertaking under Ministry of Coal, Government of India, has its Headquarters in Kolkata. It produces coking and non-coking coal of various grades for diverse applications

As of March 31, 2010, the company operated 471 mines in 21 major coalfields across eight states in India, including 163 open cast mines, 273 underground mines and 35 mixed mines (includes both open cast and underground mines). It also operated 17 coal beneficiation facilities with an aggregate designed feedstock capacity of 39.40 million tons per annum. Coal India's major consumers are the power and steel sectors. Others include cement, fertilizers, brick kilns etc

As per draft prospectus, CIL is the largest coal producing company in the world (Source: CRISIL Research), based on raw coal production of 431.26 million tons in fiscal 2010. It is also the largest coal reserve holder in the world (Source: CRISIL Research) based on reserve base as of April 1, 2010.

 

Company Financials (Consolidated):

Amount (Rs. Million)	2009-10	2008-09	2007-08	2006-07	2005-06
Total Income	5,25,922.92	4,60,640.65	3,86,166.97	3,50,054.07	3,40,087.99
PAT (Restated)	98,294.09	40,628.05	42,850.07	42,052.69	61,136.01

 Our Views:

In the next four years we expect demand for coal to increase by 11% on grounds of thermal power plants being set up in country. Coal India Limited has low cost competition advantage in industry with dominant position as it owns 48% of India's proven reserves and contributes over 81% of the total coal production in India. Given India's abundant coal reserves and the absence of other sustainable fuel sources, the company plays a strategic role in meeting countries energy requirements. The company enjoys strong financials & fundamentals. With the ever rising demand for power, we expect the company to have an impressive ROE and generate substantial free cash flows. Therefore, we recommend our investors to SUBSCRIBE to this IPO.

 

IPO DISCLAMIER:

 This article has been prepared solely for information purpose and does not constitute a solicitation to any person to buy or sell a security. While the information contained therein has been obtained from sources believed to be reliable, investors are advised to satisfy themselves before making any investments. Sprism Investment Services Private Limited does not bear any responsibility for the authentication of the information contained in the reports and consequently, is not liable for any decisions taken based on the same.  Sprism Investment Services Private Limited only seeks to provide information updates and analysis.   

 

Regards, 

Abhijit Singh| Branch Head | Sprism Investment Services Pvt Ltd

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