Coal India IPO

Some call it black gold some black diamond but the fact that Coal India is garnering much attention worldwide is not very astonishing when u consider the yield the eu and us investors get in their home country.

Coal India is a monopoly coal psu co of which govt is selling 10 % stake, mainly to plug a hole in its Fiscal deficit, is something lost on most people.

Coal India Ltd’s Rs 15,000 crore mega issue is  similar to Brazils Petrobras , Indias ONGC and Reliance Power among other giant ipos.

Priced between 225 and 245 and likely to close near the upper band this PSU pie is offered at 5% discount to issue and offers 10% to Staff and 25% to Retail Investors . Qibs get 50% while Hnis get 15%.

The govt is bound to protect this issue with Diis like LIC which is set to buy a major chunk of its shares. Expect a 20% allotment and a over subscription of more than 10 times and a listing at 5% premium or say a max of Rs 255 .

Valuations wise i expect it to trade at a discount to private miners worldwide. Worse with the UPA govts record of milking oil n gas PSUs and cheating its small shareholders, this issue doesn’t interest me in the medium term as it is bound to fall once the ipo fever is over and the Lead managers and govt stop managing the share price after a few days of listing

From past experience of mega issues /psu ipos this is, i suspect an ASBA flip for the retail investor.

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