Coal India Offer for Share (OFS) at 5% discount – Should you invest?

Coal India Offer for Share (OFS) at 5% discount – Should you invest?


Coal India Offer for Share (OFS) at 5% discount - Should you investCoal India Offer for Sale (OFS) would open on Wednesday i.e. 31st October, 2018 for non retail investors and on 1st November, 2018 for retail investors (for 1 day). Coal India is a Maharatna company of Govt of India. The government is selling 3% stake, in a public offer through offer for sale (OFS) or auction route. Coal India share price was at Rs 277 on Tuesday, at the BSE and Govt. of India has fixed the floor price at Rs 266 (4% lower from Tue price). Retail investors would get a 5 % discount on floor price. Should you invest in Coal India OFS of 2018? How is the share price performed in the last 1 year?

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About Coal India Limited


Coal India Limited is an Indian state-controlled coal mining company headquartered in Kolkata. It is the largest coal-producing company in the world and a maharatna company. The company contributes to around 82% of the coal production in India.

Details of Coal India OFS


Coal India Ltd Offer for Sale (OFS) would open for 2 days for non retail investors (31st October and 1st November) and 1 day for retail investors (1st November, 2018).

It would open at 9:15 am and closes at 3.30 pm through separate windows of BSE and NSE.

Coal India share price has closed on Tue at Rs 277 per share at BSE.

Govt of India has fixed the floor price at Rs 266 which is 4% lower than Tuesday’s share price through its announcement to BSE.

Retail investors would get the discount of 5% on floor price. i.e. on Rs 266 there would be 5% discount which may come to Rs 252.7 (approx.).

Govt of India is planning to sell overall 3% stake for which it would get approx. Rs 5,000 Crores.  However, it is planning to retain any oversubscription for an additional 6% to the tune of Rs 10,000 Crores totaling to Rs 15,000 Crores. BSE/NSE offers such facility of OFS for Top 200 Market capitalization companies on their platforms. Currently, Govt of India is holding 78.32% in Coal India and out of which LIC is biggest shareholder having almost 9% stake.

20% of such shares are reserved for retail investors.

Retail investors can apply through their stock brokers / demat account for this OFS.

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What is the purpose of the Coal India Offer for Sale (OFS)?


Govt. Of India plan to divest in several PSU companies. Minority stake sale happens through Offer for Sale (OFS).

How do you get a 5 % discount through this OFS?


Govt of India has fixed the floor price at Rs 266 which is 4% lower than Tuesday’s share price. Retail investors would get the discount of 5% on floor price, i.e. effective price is Rs 252.7 (approx.). When you apply through your demat account, you would be tagged as retail investors and discounted price would be automatically shown to you. If not, please contact your demat stock broker before applying. You cannot make any changes once you apply for that.

How is Coal India stock price in last 12 months?


On Tuesday, Coal India stock price closed at Rs 277, down by 3.6% for the day.

The 52-week high of the share was Rs 317 and the 52-week low was Rs 257.

This stock was trading at Rs 286, 1 year back indicating that it lost more than 3% in the last 1 year.

Out of 28 brokerage houses, here is their recommendations on this stock now.

– 22 – Buy / Outperformer

– 4 – Hold

– 1 – Underperformer

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Should you invest in Coal India OFS of 2018?


Currently Coal India OFS Shares are offered at 9% below the trading price on Tuesday (4% lower than the last traded price and 5% discount on trade price for retail investors). Brokerage recommendations are also positive. If you want to make money in the short term for 5% to 20% by taking risks, you can subscribe to Coal India OFS. This stock moved from Rs 286 to Rs 277 in the last 1 year, which is 3% negative return. Don’t expect this stock to be multi bagger. However, this stock can provide moderate returns in the medium to long term.

Disclaimer: I am not holding these shares as on 30th October, 2018, however, I may buy them in the future.

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Suresh

Coal India Offer for Share (OFS) at 5% discount

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