#Commodity #Tips - #Coal India falls 4% as govt to #sell stake in co via OFS

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The government currently holds 78.32 percent stake in Coal India.

Shares of Coal India fell 4 percent in the early trade on Wednesday after the government has decided to sell its stake in the company through OFS route.

The government will sell 3 percent stake in Coal India (CIL) for Rs 266 a share through OFS route on October 31, which may fetch the exchequer Rs 5,000 crore, according to sources.

The government will offer an additional 6 percent stake in case of over-subscription, sources said.

The two-day offer for sale (OFS) will open on October 31 for institutional bidders. Retail investors, who can bid for the OFS on November 1, will get an additional 5 percent discount.

If the entire 9 percent stake in CIL could be sold off, then it could fetch the government about Rs 15,000 crore.

The government had last sold 10 percent stake in CIL through an OFS in January 2015. It had then mopped up about Rs 23,000 crore.

The government currently holds 78.32 percent stake in Coal India.

At 09:18 hrs Coal India was quoting at Rs 265.05, down Rs 10.85, or 3.93 percent on the BSE.

Commodity Tips

Brokerage: JPMorgan | Rating: Neutral | Target: Rs 330

JPMorgan has maintained neutral call on Coal India with the target of Rs 330. It sees a potential upside of 20 percent.

According to research house, the much expected stake sale is going to remove one key overhang.

Operating environment is strong given the price hikes and strong E-auction prices. It struggles to see stock breaking out Rs 260-330 range on growth concerns beyond FY19.

Brokerage: Macquarie | Rating: Outperform | Target: Rs 335

Macquarie has maintained outperform rating on Coal India with a potential upside of 21 percent. The firm keep a target of Rs 335 per share.

Divestment has been a key overhang and recommend subscriber to offer for sale, it added.

Coal India is well placed given current tightness in domestic coal market and the estimated dividend yield of 7 percent for FY19 has upside risk, given government’s fiscal stress.

Disclaimer:- The views and investment tips expressed by investment experts are their own. Ripples Advisory advises users to check with certified experts before taking any investment decisions.

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