Shares of Coal India fell sharply in Thursday's trade, extending their fall for the third straight session after the state-owned coal producer began a two-day offer-for-sale (OFS). The stock tanked 5.03 per cent to hit a day low of Rs 229.65 over its previous close of Rs 241.20. The government is proposing to sell up to 3 per cent stake and for which, the floor price is set at Rs 225, much lower than today's low price.
The Coal India OFS would be a part of the government's plan to divest its stake in public sector undertakings. At present, the government owns a 66.20 per cent stake in the coal producer.
On June 1, the OFS would be open for non-retail investors only. These investors, while placing their bids, can flag their willingness to carry forward their unallotted bids to T+1 day for allocation to them in case the retail category stays unsubscribed. On June 2 (tomorrow), it would be open for both retail and non-retail investors.
Coal India said 10 per cent of the offer shares would be reserved for allocation to retail investors
"The seller proposes to sell up to 9,24,40,924 equity shares of a face value of Rs 10 each of the company (representing 1.50 per cent of the total paid-up equity share capital) (base offer size), on June 1st and 2nd for retail investors and non-retail investors. There will be an option to additionally sell 9,24,40,924 (1.50 per cent) equity shares of the company," Coal India stated in an exchange filing.
"5 per cent of the offer size may be offered to eligible and willing employees of the company, subsequent to the completion of the offer and subject to approval from the competent authorities in accordance with applicable laws. The employees will be eligible to apply for equity shares up to 5,00,000. The allotment to an employee will be up to 2,00,000 and in the event of undersubscription in the employee portion, the total allotment to an employee shall not exceed 5,00,000," it further mentioned.
On the technical setup, the stock was last seen trading higher than the 50-day, 100- and 200-day moving averages but lower than the 5-day and 20-day moving averages. The counter's 14-day relative strength index (RSI) came at 40.66. A level below 30 is defined as oversold while a value above 70 is considered overbought. The company's stock has a price-to-earnings (P/E) ratio of 10.04. It has a price-to-book (P/B) value of 8.90.
The scrip has an average target price of Rs 254, Trendlyne data showed, suggesting a potential upside of 10 per cent. It has a one-year beta of 0.71, indicating low volatility on the counter.
In a separate development, Coal India has increased prices of non-coking coal by 8 per cent, a move that would help offset 50 per cent of higher employee cost post-wage hike announced in January 2023. This is the first major hike since January 2018.
Meanwhile, Indian equity benchmarks traded higher in today's early deals amid a volatile trading session. The domestic indices were up led by gains in technology, pharma, consumer and metal stocks.
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