Forget market appetite. Good fundamentals and attractive pricing can do the trick for a public issue of shares. That is what experts say on the public issue of Coal India Ltd, which has already been subscribed 11.64 times with one more day to go before the issue closes. Market watchers anticipate CIL's initial public offering to garner the highest-ever cash collection in an IPO.
The CIL issue — expected to raise R15,475 crore — has already received offers totalling Rs 180,129 crore. Its is Rs 74,343 crore short of Reliance Power IPO’s cash collection of Rs 254,472 crore in January 2008. The CIL IPO has been priced at between Rs 225 and Rs 245.
“I expect the issue to cross the highest cash collections as high networth individuals (HNIs) and retail participants come in large numbers on the last day of the issue,” said Prithvi Haldea, managing director, Prime Database.
Pricing has been a big pull for the issue that has strong fundamentals and hence appeals to all segment of investors.
“Pricing is the key to this IPO and something is there for investors in value terms,” said C J George, CEO, Geojit BNP Paribas Financial Services.
“The response to the issue shows that the market has great appetite for good paper and good price.”
Others too echo similar views.
“The success of the IPO shows strong fundamental and good pricing is critical,” said Haldea.
While huge amount of money is getting absorbed into this public issue, experts do not see any liquidity problem.
“There is enough liquidity in markets worldwide and there should be no problem on that account due to this issue and its record collections,” said George.
CIL is set to enter the Sensex and the Nifty with a market cap of R154,750 crore (at the price of R245 per share) at listing
The world’s largest coal producing company has coal reserves of 18,862.9 million tonnes as on April 1, 2010 and had reported a net profit of Rs 9,833 crore for the fiscal year ended March 2010. The company is expecting to meet its coal production target of 460.5 million tonnes in the current fiscal year against 431.3 million tonnes last fiscal year.