NEW DELHI: The government will raise up to $3.5 billion from a price band of Rs 225 to Rs 245 for state-run Coal India's initial public offering, the largest in the country's corporate history. The government is selling 631.6 million shares, or 10 percent stake in the world's largest coal miner.
The share sale is part of the country's plan to divest its stakes in roughly 60 companies over the next few years. "I think the pricing is much better than what we were expecting. We were expecting it to be Rs 260 at the upper end," said Ambareesh Baliga, vice president of Karvy Stock Broking in Mumbai.
"The response from institutional investors is expected to be very good," he added. Priced at the top end of the band, the company would be valued at $35 billion, placing it among the top Indian firms by market value. It is the seventh-largest IPO in Asia this year.
Speaking to reporters on Tuesday, the country's coal minister said the IPO would raise more than Rs 15,000.
Sources said the EGoM fixed the price band at Rs 225- Rs 245 a share to garner maximum from the four-day initial public offering (IPO), billed as the biggest ever to hit the Indian capital market on October 18.
The four-member EGoM includes Home Minister P Chidambaram, Coal Minister Sriprakash Jaiswal and Planning Commission Secretary Sudha Pillai.
Among other factors, EGoM considered the share prices of major global coal companies including China Shenhua Energy Company, the world's most valuable coal producer, to arrive at a figure, sources added.
CIL filed the prospectus (Red Herring Prospectus) for the issue with SEBI, after being cleared by the Registrar of Companies, in the last week of September. Its board cleared the revised papers incorporating 78 changes suggested by the market regulator.
With over 63 billion tonnes of coal reserves under its fold, CIL is targeting an output of 461.5 million tonnes in the current financial year.
The biggest IPO in India till date is that of Anil Ambani Group company Reliance Power . In January, 2008, it raised Rs 11,500 crore.
Coal India, based in Kolkata, holds a dominant position in the fast-growing Indian market. The state monopoly produced 431 million tonnes in 2009/10 and accounts for nearly 80 percent of coal output in Asia's third-largest economy.
Coal powers 75 percent of India's electricity output, and annual demand is expected to swell at 11 percent. The country, which faces a peak-hour power deficit of nearly 14 percent, plans to triple its generation capacity over the next decade. It reported earnings per share of Rs 15.60 for the fiscal ended March 2010. China's Shenhua Energy, the Indian miner's closest rival, trades at 16 times earnings, while smaller Indonesian peer Adaro Energy has a price-to-earnings ratio of 20 times.
U.S. miner Peabody Energy trades at 25 times earnings. The IPO opens on October 18 and closes on October 21. The listing on the Bombay Stock Exchange is expected by Nov 4. Morgan Stanley, Citigroup, Kotak Mahindra Capital, Enam Securities, Deutsche Bank, and Bank of America-Merrill Lynch are the managers for the offer.
Tuesday, October 12, 2010
Sunday, September 19, 2010
FII rally may propel Sensex towards 20K
Indian stocks rose to a fresh 32-week high on Friday, fuelling expectations of the benchmark Sensex topping the 20,000 mark as early as next week on the back of abundant foreign fund inflows.
The Sensex had last touched the 20,000 mark over 32 months ago in January 2008, well before the start of the worst financial crisis that year marked by the collapse of storied-investment bank Lehman Brothers.
Over the last six months, foreign investors have been the primary drivers of the rally, buying at every given opportunity while local institutional investors, including mutual funds, have been offloading shares.
Provisional data on the websites of stock exchanges show that foreign funds have bought shares worth close to Rs 1,500 crore on a net basis on Friday alone. Dealers at foreign broking houses say a sizeable chunk of the money is coming through exchange-traded funds, which some view as hot money.
The 30-share Sensex hit a high of 19,639.18 intra-day, before settling at 19,594.75, up 177.26 points over Thursday’s close. The 50-share Nifty closed at 5,884.95, up 56.25 points, or 1%, over the previous close. Stock markets not just in India but also in other parts of Asia, including Sri Lanka and Pakistan, have been going up, taking a lead from Wall Street.
Foreign funds have been buying into Indian stocks given the growth potential in an economy that is projected to grow at over 8.5% this fiscal, rather than investing in other major economies in the West where growth is faltering.
“The fundamentals of the economy are strong, but the market is going a bit too fast, fuelled by foreign money,” said Nirmal Jain, chairman and managing director, IIFL. Mr Jain has a word of caution for those buying and selling shares. “Any event that could disrupt foreign fund flows could trigger a sharp correction and investors should brace for a choppy ride in the short term,” he warned.
Investors, however, continue to place faith in second-line stocks, pushing up the BSE Midcap index by 1.4%. This despite the fact that many brokers have advised their clients to pare exposure to mid- and small-cap shares in a rapidly rising market, since these stocks take a steep hit when the market corrects.
“There is a feeling of euphoria when you look at the rise in the last three weeks. But on a calendar basis, the market is up 12-13%, which is not much,” said Rashesh Shah, CMD, Edelweiss Capital.
Brokers say valuations are not exorbitant when compared to those at the peak of the bull run in early January 2008, when the Sensex was trading over 25 times one-year forward earnings. Yet the spate of share issuances by companies is a cause of worry, they say.
The Sensex had last touched the 20,000 mark over 32 months ago in January 2008, well before the start of the worst financial crisis that year marked by the collapse of storied-investment bank Lehman Brothers.
Over the last six months, foreign investors have been the primary drivers of the rally, buying at every given opportunity while local institutional investors, including mutual funds, have been offloading shares.
Provisional data on the websites of stock exchanges show that foreign funds have bought shares worth close to Rs 1,500 crore on a net basis on Friday alone. Dealers at foreign broking houses say a sizeable chunk of the money is coming through exchange-traded funds, which some view as hot money.
The 30-share Sensex hit a high of 19,639.18 intra-day, before settling at 19,594.75, up 177.26 points over Thursday’s close. The 50-share Nifty closed at 5,884.95, up 56.25 points, or 1%, over the previous close. Stock markets not just in India but also in other parts of Asia, including Sri Lanka and Pakistan, have been going up, taking a lead from Wall Street.
Foreign funds have been buying into Indian stocks given the growth potential in an economy that is projected to grow at over 8.5% this fiscal, rather than investing in other major economies in the West where growth is faltering.
“The fundamentals of the economy are strong, but the market is going a bit too fast, fuelled by foreign money,” said Nirmal Jain, chairman and managing director, IIFL. Mr Jain has a word of caution for those buying and selling shares. “Any event that could disrupt foreign fund flows could trigger a sharp correction and investors should brace for a choppy ride in the short term,” he warned.
Investors, however, continue to place faith in second-line stocks, pushing up the BSE Midcap index by 1.4%. This despite the fact that many brokers have advised their clients to pare exposure to mid- and small-cap shares in a rapidly rising market, since these stocks take a steep hit when the market corrects.
“There is a feeling of euphoria when you look at the rise in the last three weeks. But on a calendar basis, the market is up 12-13%, which is not much,” said Rashesh Shah, CMD, Edelweiss Capital.
Brokers say valuations are not exorbitant when compared to those at the peak of the bull run in early January 2008, when the Sensex was trading over 25 times one-year forward earnings. Yet the spate of share issuances by companies is a cause of worry, they say.
Monday, September 13, 2010
Nifty ends above 5750; banks, oil & gas, realty up
Indian equities closed near January 2008 high levels on Monday as foreign institutional investors remained bullish following better than expected economic data from across the globe.
National Stock Exchange’s Nifty ended at 5760, up 119.95 points or 2.12 per cent. The index touched high of 5770.60 and low of 5639.20 in today’s trade.
Bombay Stock Exchange’s Sensex closed at 19208.33, up 408.67 points or 2.20 per cent. The sensitive index hit intraday high of 19243.44 and low of 18845.31.
BSE Midcap Index was up 0.75 per cent and BSE Smallcap Index moved 0.18 per cent higher.
Amongst the sectoral indices, BSE Bankex gained 3.70 per cent, BSE Oil & gas Index advanced 2.56 per cent and BSE Realty Index advanced 2.32 per cent.
State Bank of India (5.83%), HDFC (5.60%), Kotak Bank (4.67%), Hindalco (4.61%) and Reliance Infrastructure (4.51%) were amongst the top Nifty gainers.
Idea Cellular (-2.48%), Reliance Communications (-2.02%), Wipro (-0.98%), Reliance Capital (-0.89%) and Suzlon Energy (-0.78%) resisted the upmove.
Market breadth was positive on the NSE with 1639 gainers against 1592 losers.
India’s Index of Industrial Production ((IP) for the month of July was reported Friday to have grown 13.8% beating market forecast of 8.4%. European markets also moved higher after Basel III norms for banks were announced. In the US, wholesale inventories rose 1.3% in July, much better than the forecasted 0.5% and US jobless claims fell to a two-month low.
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