Buzz on Coal India split-up sends shares surging
The stock was among the top gainers on the Nifty, rising 8.22% in early trade to Rs 401.40, highest since August 2011. The stock jumped 5.37% to end at Rs 390.80. On the BSE, stock rose by 4.78%to settle at Rs 389.95.business Updated: May 22, 2014 23:53 IST
Shares of Coal India Ltd (CIL), the world’s biggest coal miner, hit their highest level in nearly three years on Thursday after reports that Narendra Modi, who will become prime minister on Monday, was exploring breaking up the company and opening up the sector.
The stock was among the top gainers on the Nifty, rising 8.22% in early trade to Rs 401.40, highest since August 2011. The stock jumped 5.37% to end at Rs 390.80.
On the BSE, stock rose by 4.78%to settle at Rs 389.95. During the day, the scrip climbed 7.75% toRs 401 — its 52-week high.
Modi wants to fix India’s inefficient coal sector to improve electricity supply across the country. Coal generates more than half of the country’s power and is the cheapest form of energy.
Sources said any reform will begin with Coal India, which accounts for 80% of India’s total coal output but has failed to meet its output targets for years.
Meanwhile, consultancy firm Deloitte is likely to take more time to submit its final report on restructuring of CIL as the draft has to be seen by the next government. The delay on the final report comes amidst speculation that various units of CIL could be converted into independent companies.
It is also speculated that states could be made equity holders in new independent firms to boost production.
Deloitte was to submit the report by March-end this year.
(With inputs from Reuters and PTI)