India's largest ever IPO of Coal India (CIL), India's largest coal producing company, will open for subscription on October 18, 2010. A price band has been set at Rs 225-245 a share. Nirmal Bang has advised subscribing the issue of CIL, in its research report.
The government expects to raise over Rs 15,000 crore through the IPO, which will be largest ever amount raised by an Indian company via offering. Employees and retail investors will get 5% discount to the issue price. The company will not receive any proceeds from the offer and all proceeds will go to the selling shareholder (GoI), whose stake will be 89.99% post the issue. The IPO will close on October 21, 2010.
The report says, "CIL is globally the largest coal company, both in terms of reserve and production. Given the growing coal demand, short supply of coal and CIL being the paramount player in India in its business, the outlook looks positive. The prevailing global average P/E hovers around 20.0x and EV/EBITDA around 12.0x. CIL is offered at 15.7x P/E multiple and 6.3x EV/EBITDA multiple of FY10 earnings which looks attractive. Hence, we recommend to subsribe this IPO."
To read the full report click on the attachment
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