The government’s offer for sale (OFS) of shares in Coal India Limited (CIL) was oversubscribed by both retail and institutional investors on the second day of bidding on Friday.
The government sold 18.48 crore shares, or 3% of its stake in CIL, at a floor price of Rs 225 per share. The OFS was open to both retail and institutional investors.
Retail investors bid for 2.58 crore shares, while institutional investors bid for 5.12 crore shares. The total bids received were 8.7 crore shares, which is 417% more than the offer size.
The government is expected to raise over Rs 4,000 crore from the OFS. This will be the first time that the government has sold shares in a public sector undertaking (PSU) in the current fiscal year.
The OFS in CIL is part of the government’s disinvestment plan for the current fiscal year. The government has set a target of raising Rs 51,000 crore from disinvestment in PSUs.
The OFS in CIL was well-received by investors due to the company’s strong financial performance and its dominant position in the Indian coal market. CIL is the world’s largest coal producer and accounts for over 80% of India’s coal production.
The company has been consistently profitable and has paid regular dividends to its shareholders. In the financial year 2022-23, CIL reported a net profit of Rs 18,154 crore.
The OFS in CIL is a positive development for the government’s disinvestment plan. It is also a positive development for the Indian stock market, as it shows that investors are still willing to invest in PSUs.
The success of the OFS in CIL is likely to encourage the government to sell shares in other PSUs in the near future. This will help the government to raise much-needed funds to meet its fiscal deficit target.
Impact of the OFS on Coal India
The OFS in CIL is likely to have a number of positive impacts on the company. The sale of shares will reduce the government’s stake in CIL, but it will also provide the company with much-needed capital.
The company can use this capital to invest in new projects, expand its production capacity, and improve its operational efficiency. This will help CIL to meet the growing demand for coal in India and to improve its profitability.
The OFS is also likely to improve CIL’s corporate governance standards. The company will now be subject to the same scrutiny as other listed companies. This will help to ensure that CIL is run in a transparent and efficient manner.
Overall, the OFS in CIL is a positive development for the company and for the Indian economy. It is a sign that the government is committed to disinvestment and that investors are still willing to invest in PSUs.
— The Indian Insight (@T_IndianInsight) June 2, 2023