Expected Listing : Above Rs. 255
Issue Details
Company Incorporate : 1973
Reg.Office Kolkatta
Industry : Coal Mining
Offered Shares 631 Cr.
Offer Size at Higher offer Price 15460 Cr.
Offer Price Rs. 225 – 245
Retailer Discount 5 % (After Dis. Issue Price-Rs.233)
Post Issue Equity Capital 6316 Cr.
Issue Open Date 18 Oct 2010(Monday)
Issue Close Date 21 Oct 2010 (Thursday)
Retail Quota 35 % (Rs. 4865 Cr.)
Face Value Rs. 10
Market Lot 25 Shares
1 Lot Value @ Cap Price Rs. 6,125
Maximum Application for Retailers Lot –16, Shares-400, INR98,000
Industry Outlook:
According to CRISIL Coal Outlook, as of the date of the report, coal meets approximately 41.0% of the world's electricity needs.
The major coal exporting countries in the world are Australia (244 million tons), Indonesia (202 million tons), Russia (100 million tons) and South Africa (67 million tons). The major coal importing countries are Japan (182 million tons), Republic of Korea (88 million tons), Taiwan (69 million tons), the United Kingdom (50 million tons) and Germany (46 million tons). (Source: CRISIL Coal Outlook). In fiscal 2010, India imported about 67.74 million tons of coal.
Nationalization of the Indian coal industry occurred in the early 1970s with a view to enable investment of large public fund for faster growth in coal sector.
Coal is the dominant source of energy and met 52.4%, primary energy requirement of India in fiscal 2009.
According to CRISIL Coal Outlook, demand for non-coking coal in the power sector is expected to increase at a CAGR of 11.3% between fiscal 2009 and 2014.
The total coal production in India during fiscal 2008, 2009 and 2010 was 457.00 million tons, 492.76 million tons and a projected 532.06 million tons, respectively, representing a growth rate of 6.1%,
7.8% and 8.0%, during the said period.
11th Five-Year plan projected a gap between the demand and availability of coal in fiscal 2012 to be 51.0 million tons, the revised projections according to the MTA estimate the shortfall to be 83.3 million tons,
In fiscal 2010, India imported about 67.74 million tons (provisional) of coal which is 11.69 % of its total coal consumption.
Company Outlook:
Coal India is the largest coal producing company in the world, based on its raw coal production of 431.26 million tons in fiscal 2010.
Coal India is also the largest coal reserve holder in the world based on its reserve base as of April 1, 2010. Coal India had a total of 18,862.9 million tons of Total Reserves, comprising 10,595.1 million tons of Proved Reserves and 8,267.8 million tons of Probable Reserves.Coal produced by it accounted for approximately 81.9% of coal production in India in fiscal 2009.
Coal India operated 471 mines in 21 major coalfields across eight states in India. Coal India produce non-coking coal and coking coal of various grades for diverse applications.
Non-coking coal represents a substantial majority of their raw coal production, and represented 93.1%, 93.4%, 91.6% and 90.5% of their total coal production in fiscal 2008, 2009 and 2010 and in the three months ended June 30, 2010, respectively.
As of March 31, 2010, 45 projects (comprising 22 capacity expansion projects for existing mines and 23 new mine projects) had received relevant investment approval.
25 projects, with an aggregate estimated capacity of 47.51 million tons per annum were at various stages of implementation and are expected to become operational by the end of fiscal 2012; and (ii) 20 longer gestation projects, with an aggregate estimated capacity of 33.27 million tons per annum, are expected to become operational during the 12th Five Year Plan period (2013-2018).
Coal India have also established a wholly-owned subsidiary in Mozambique, Coal India Africana Limited ("CIAL"), to pursue coal mining opportunities in Mozambique and have acquired prospecting licenses for two coal blocks in Mozambique.
As of June 30, 2010, Coal India had 394,041 employees, including 14,968 executives, 38,773 supervisors and 340,300 workmen.
Management Details
Mr. Partha S. Bhattacharyya, aged 59 years
Designation :Chairman and Managing Director
He holds a post graduate degree in physicsfrom Jadavpur University, Kolkata, and a diploma in finance from ICFAI University, Hyderabad. He is also a Fellow of the Institute of Cost and Works Accountants of India and the World Academy of Productivity Science.
Strengths
Coal India has strong track record of financial performance and steady cash flows from its existing operations provide it with sufficient resources to fund their projects, support their working capital requirements.
Coal India is well positioned to capitalize on the high demand for coal in India, particularly in the thermal power, iron and steel, cement and other manufacturing and industrial sectors.
Coal India's raw coal price increases have been lower than average inflation rates in India and are significantly less than the landed cost of imported coal in India.
As a result of the high demand for coal in the thermal power sector and the iron and steel industry, demand for non-coking coal in India is projected to grow at a CAGR of 11.3% from 508 million tons in fiscal 2009 to approximately 868 million tons in fiscal 2014, while the demand for coking coal is likely to increase at CAGR of 9.7% in the same period.
Risk Factors
Coal India currently operate 279 loss making mines, or 59.2% of our total mines, which accounted for 13.0% of their total production. These mines have historically contributed to losses in their operating subsidiaries in the absence of scope of mechanization and adverse geo-mining conditions, together with socio-political conditions that make it difficult for us to discontinue operations at these mines.
To share 26% of our profits with local inhabitants
The quality of Indian coal is considered lower in comparison to coal from some other countries, primarily due to its higher ash content and lower GCV. Most of the coal available in India, including their reserves, is lower quality non-coking or thermal coal, used primarily in the power generation sector.
Coal India have in the past experienced significant delays in obtaining relevant statutory and regulatory approvals for the acquisition of land and surface rights to commence mining activities on some of their projects, including delays related to negotiation of rehabilitation packages for existing owners and displaced communities and the implementation of the rehabilitation and resettlement process.
Valuation Note
Coal India F.Y. 11 Mar 10 (12 M) –BV -Rs. 58.59 x MP / BV Ratio 5 = Rs.292.95
Coal India F.Y. 11 Mar 10 (12 M) –EPS Rs. 18 x P/E Ratio 15 = Rs.270
Coal India @Rs. 338.30/-. Congrats all for wonderful listing gains.
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