State-owned firm Coal India Limited is all set to launch its IPO this month. The Government is aiming to sell 10% share of its equity to raise funds for long-term policy goals like poverty elimination and infrastructure development. The company expects to raise around Rs.16,500 crore through this stake sale. The offer price is yet to be fixed and is scheduled to be fixed on October 12. Only after the price band is fixed, the valuations can be arrived at.
The proceeds from the stake sale would also give Coal India an added leverage to buy coal mines overseas. Although among the largest coal producing nations, the country’s manufacturing units and power plants have been facing coal shortage for quite sometime.
The IPO is well positioned as far as the Indian stock markets are concerned. Looking at the credentials of the company, the IPO should be a success. The company is not only the largest coal producer but also one of the largest reserve holders of coal in the world. It has strong financials and execution capabilities.
As of April 1, 2010, it had total coal resources of 64,786 million tons comprising Proved Geological Reserves of 52,546 million tons, Indicated Geological Reserves of 10,298 million tons and Inferred Geological Reserves of 1,942 million tons. From the total coal resources of 64,786 million tons, 30,356 million tons has been considered for mining studies. Out of these, 21,754 million tons have been estimated as the Extractable Reserves.
This IPO is an opportunity not to be missed for investors seeking value addition to their portfolio.
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