PUBLIC SECTORCoal India OFS: Share price rebounds from intraday lows on last day of subscription....

Coal India OFS: Share price rebounds from intraday lows on last day of subscription. Buy or wait?

Coal India shares extended its losing steak for fifth straight session during early morning deals on Friday. Coal India share price today opened lower and went on to hit intraday low of ₹228.10 apiece levels on NSE. However, the PSU stock witness strong buying interest at intraday lows that helped Coal India shares to bounce back strongly and pare early morning losses. Coal India share price surged in second half of Friday session and hit intraday high of ₹233.40, around 2.50 per cent rise from today’s lows.

The PSU stock had been falling ever since Government of India (GoI) announced to offload its 3 per cent stake in Coal India Ltd. The Coal India OFS opened for subscription on 1st June 2023 and it is going to end on 2nd June 2023 i.e. today. However, if we look at the Coal India share price history, the stock has been falling since May 30, 2023.

According to stock market experts, Coal India shares was falling because of its OFS, which was offered at ₹225 apiece. As current market price of the Coal India shares was quite high, Coal India shareholders started offloading their position fearing market adjustment after the announcement of Coal India OFS price. So, it is more a tactical sell off as fundamentals of the company are still strong. They advised positional investors to apply for the Coal India OFS and at the same time, they advised them to buy Coal India shares in ₹220 to ₹230 per share range for short term target of ₹260.

Coal India OFS: Apply or not?

Expecting strong bounce back in Coal India share, Saurabh Jain, Vice President — Research at SMC Global Securities said, “Coal India shares are under sell off pressure as its OFS has been announced at ₹225 apiece levels, which was much lower than its recent highs of around ₹250. So, retail investors started offloading the stock as they fear price adjustment in the market ahead of the OFS opening. So, it was more a tactical selling as fundamentals that helped Coal India shares to rise in recent sessions are still intact. We are expected strong recovery once the OFS ends.”

On suggestion to retail investors in regard to Coal India OFS, Saurabh Jain said, ‘A retail investor is advised to apply for the OFS even when current market price of Coal India share are around its OFS price. But, OFS carries limited number of shares. So, my suggestion for stock market investors is to apply for the Coal India OFS and at the same time they should buy Coal India shares, if they have surplus amount for investing.”

Suggesting ‘apply’ to Coal India OFS, Santosh Meena, Head of Research at Swastika Investmart said, “The outlook for Coal India in FY24 appears bullish, primarily driven by robust power demand in India, supported by the growth of the manufacturing sector and rural electrification initiatives. Given our positive sentiment towards the entire Public Sector Undertaking (PSU) space, we view any potential technical dips resulting from news about Offer for Sale (OFS) as attractive buying opportunities. We recommend investors to consider participating in this OFS, as we believe the downside risk is limited around the ₹225 level.”

Giving ‘buy’ tag to Coal India shares and OFS, Sumeet Bagadia, Executive Director at Choice Broking said, “Coal India shares have strong support placed at ₹220 to ₹230 apiece levels and it is a good supply zone for the PSU stock as well. In near term, the PSU stock is looking highly bullish and it may go up to ₹260 apiece levels in short term.”

Coal India OFS details

Informing Indian bourses about Coal India OFS, Coal India said, “”We wish to intimate the Stock Exchanges of our intention to exercise the Oversubscription Option after trading hours on T day to the extent of up to 9,24,40,924 equity shares (representing 1.50% of the total issued and paid-up equity share capital of the Company) in addition to 9,24,40,924 equity shares of the Company (representing 1.50% of the total issued and paid-up equity share capital of the Company) forming part of the Base Offer Size. Accordingly, the total Offer size will be 18,48,81,848 equity shares (representing 3.00% of the total paid up equity share capital of the Company as on March 31, 2023). Consequently, 1,84,88,185 equity shares would be reserved for allocation to Retail Investors, subject to receipt of valid bids, as part of the Offer on June 02, 2023.”

In non retail category, Coal India OFS got fully subscribed on day one of bidding. The OFS has opened for retail investors today.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of The Bulletin Today. We advise investors to check with certified experts before taking any investment decisions.


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