Shares of Coal India, a Maharatna Central Public Sector Enterprise (CPSE), fell the most in over six months after the Union Government said that it would sell a 3% stake in the company this week.
The state-run company’s share price declined by 5% on Thursday’s early trades to reach an intraday low of ₹ 229.15 apiece on the National Stock Exchange (NSE). At 01:05 PM, its shares were trading at ₹ 229.80, down 4.75%.
According to an exchange filing, the government will sell up to 9,24,40,924 shares, amounting to a 1.50% stake in the company, in line with its divestment targets. The floor price for the sale is fixed at ₹ 225.00 per share, which is at a discount of 6.74% as compared to Coal India’s closing share price of ₹ 241.25. The disinvestment is expected to fetch at least ₹ 4,158 crore for the government.
Moreover, the government retains the right to sell an additional equal amount of stock in the event of oversubscription. This represents a total of 18,48,81,848 shares (3.00%) including the base offer.
The offer for sale will remain open on June 01 and June 02 for non-retail investors and on June 02, 2023, for retail investors. This is the first time that the government is selling a stake in the company in the current financial year.
The offer for sale shall take place during trading hours on a separate window of the stock exchanges for both non-retail as well as retail investors according to an exchange filing.
In another development, the company’s board on May 31, 2023, approved an 8% hike in prices for high-grade G2 to G10 coal. It expects this move to garner an incremental revenue of ₹ 2,703 crores during the rest of fiscal 2024.
Coal India is a large-cap company with a market capitalization of ₹ 1,48,676 crores. It has a high return on equity of 56.11% and an ideal debt-to-equity ratio of 0.08. Its shares were trading at a price-to-earnings ratio of 5.28, which is almost at par with the industry P/E of 5.42. It has a very high dividend yield of 9.64%.
Currently, the company’s promoters hold a 66.13% stake in it followed by domestic institutions with 12.10%, mutual funds with 8.71%, foreign institutions with 7.84% and retail investors with 5.22%.
Written By Simran Bafna
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