The Indian primary market is set to welcome a significant new entrant from the coal sector. Bharat Coking Coal Ltd (BCCL), a subsidiary of the state-owned mining giant Coal India Ltd, is launching its initial public offering (IPO). This move marks a pivotal moment for the company and offers investors a chance to participate in the growth story of a critical raw material supplier to the nation's steel industry.
IPO Details and Key Dates
The Bharat Coking Coal IPO is structured as a pure offer for sale (OFS) by the Government of India. The offering comprises the sale of up to 2.10 crore equity shares, representing a portion of the government's holding. The total issue size is estimated to be around ₹1,500 crore, based on the price band. The subscription window for the public issue is scheduled to open on Wednesday, January 10, 2024, and will close on Friday, January 12, 2024.
The company has set a price band of ₹135 to ₹140 per share for its equity shares. Investors can bid for a minimum of 107 shares and in multiples thereof. Given the price band, the minimum investment amount for retail investors would be approximately ₹14,445 to ₹14,980. The finalization of the basis of allotment is expected by Tuesday, January 16, 2024. Successful allottees can expect the initiation of refunds by Wednesday, January 17, 2024, while the shares will be credited to demat accounts by Thursday, January 18, 2024.
Grey Market Premium and Financial Performance
Ahead of the official subscription, the grey market has started indicating investor sentiment. Reports suggest that shares of Bharat Coking Coal are commanding a Grey Market Premium (GMP) of around ₹5. This implies that the shares are trading in unofficial, pre-listing markets at approximately ₹145, a premium over the upper end of the price band. It is crucial to remember that GMP is an unofficial indicator and can be highly volatile, changing rapidly based on market mood and subscription trends.
Bharat Coking Coal holds a dominant position as a supplier of prime coking coal to the Indian steel sector. The company's financial performance has shown robust growth. For the fiscal year ending March 2023, BCCL reported a net profit of ₹2,272 crore on a total income of ₹19,782 crore. This represents a significant jump from the previous year, underscoring the company's operational strength and the strong demand for its products.
Listing and Future Prospects
The much-anticipated listing of Bharat Coking Coal shares on the stock exchanges is slated for Friday, January 19, 2024. The equity shares will be listed on both the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE), providing ample liquidity and visibility to investors.
The lead managers for this public offering are SBI Capital Markets Ltd and ICICI Securities Ltd, while Link Intime India Pvt Ltd has been appointed as the registrar. The IPO presents an opportunity for investors to gain exposure to a strategically important company in the industrial infrastructure space. As India continues its focus on infrastructure development and steel production, the demand for high-quality coking coal is expected to remain steady, potentially benefiting BCCL's long-term prospects. However, investors are advised to carefully review the company's red herring prospectus (RHP), consider the inherent risks of the cyclical commodity business, and align the investment with their own financial goals and risk appetite before applying.
