Shares of Coal India fell 5 per cent 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 government seeks to raise Rs 4,200 crore ($567 million) from the two-day OFS, with a base offer to sell up to 1.5 per cent of the total paid-up equity.
Coal India shares are under pressure since Tuesday’s deals as the PSU stock has announced offers for sale at a discounted price of Rs 225 per share.
Coal India OFS has opened today and it will remain open for subscription till 2nd June 2023. According to stock market experts, Coal India’s share price is under pressure after Coal India OFS news as Coal India OFS is offered at a high premium and shareholders of the company are offloading their position as they have the option to buy scrip at discounted prices via OFS. So, it is more strategic than any flaw in the fundamentals of the company. They advised positional investors to buy around Rs 220 apiece levels as the stock may bounce back strongly after the end of Coal India OFS.
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.
Why are Coal India Shares Falling?
Brokerage firm Nuvama came out with its view after the announcement of Q4 earnings where it recommended a ‘Buy’ on the stock for a price target of Rs 365.
Advising bottom fishing in Coal India shares, Sumeet Bagadia, Executive Director at Choice Broking said, “Coal India shares have strong support at Rs 210 apiece levels. One can buy this scrip in Rs 220 to Rs 230 range maintaining stop loss at Rs 210 per share levels. Coal India shares may bounce back strongly and hit ₹250 to Rs 260 apiece levels in short term.”
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