The initial public offering for Bharat Coking Coal Limited entered its third and final day on Tuesday. Investor interest remains exceptionally strong as the bidding period draws to a close.
Strong Market Sentiment Ahead of Listing
The Rs 1,071-crore issue currently commands a grey market premium of Rs 11. This unofficial market indicator suggests nearly 46% potential gains over the upper price band of Rs 23 per share. Based on this positive trend, analysts estimate the stock could list at approximately Rs 34.
Subscription Numbers Show Widespread Interest
By the end of the second day, the overall subscription reached 33.67 times the offered shares. This demonstrates robust demand across all investor categories.
Retail Investors Show Confidence
Retail Individual Investors subscribed their allocated quota 26.94 times. They were allotted 13.85 crore shares, showing strong participation from smaller investors.
Non-Institutional Investors Lead Demand
Non-Institutional Investors witnessed exceptionally high interest. Their subscription reached 96.36 times for the 5.93 crore shares available to them. This signals strong confidence among high-net-worth individuals and corporate entities.
Institutional Participation
Qualified Institutional Buyers recorded a subscription of about 1.33 times against their allocation of 7.91 crore shares.
Key IPO Details
The offer represents an entirely secondary sale by Coal India. It closes today with a price band of Rs 21 to Rs 23 per share. The face value stands at Rs 10, with a minimum application size of 600 shares. Listing is proposed on both the National Stock Exchange and Bombay Stock Exchange.
Company Background and Operations
Bharat Coking Coal is India's largest producer of coking coal. It serves as the only significant domestic supplier of prime coking coal, a crucial input for steel production.
The company estimates its coking coal reserves at 7.91 billion tonnes as of April 2024. This accounts for nearly 21.5% of India's total coking coal resources. During FY25, BCCL produced 58.5% of the nation's domestic coking coal output.
Operations span 34 mines across the Jharia coalfields in Jharkhand and Raniganj coalfields in West Bengal. As a wholly owned subsidiary of Coal India, BCCL benefits from its parent company's technical expertise, financial strength, and operational scale.
In FY25, the company reported revenue of Rs 14,401 crore with a consolidated profit of Rs 1,240 crore. It remains debt-free and cash-generative despite some margin fluctuations.
Brokerage Recommendations
Anand Rathi Research considers BCCL fairly valued at approximately 8.64 times price-to-earnings based on FY25 earnings at the upper price band. Given consistent performance and strong financials, the brokerage recommends subscribing for potential listing gains.
SBI Securities also suggests subscribing at the cut-off price. They highlight BCCL's dominant position in domestic production, estimated reserves of 7.91 billion tonnes, and enterprise value to EBITDA ratio of 6.4 times based on post-issue capital.
Issue Management
IDBI Capital Markets & Securities Limited and ICICI Securities Limited serve as book-running lead managers. KFin Technologies Limited acts as the registrar for the offering.
Disclaimer: Recommendations and views on financial markets provided by experts represent their own opinions. These do not necessarily reflect the views of any particular publication.
