CURRENT NEWS ANALYSIS

GROUP-5

HITESH KEWLANI
PRADIP PATEL
PRAKASH PRAJAPATI
GIRISH NAIR
JASMIN VACHHANI
GOVT. SETS A COAL INDIA IPO PRICE BAND

Business standard
13-10-2010
 News overviews

 Coal India (CIL) has been fixed at Rs 225-245 a share.

 The government expects to raise over Rs 15,000 crore through the IPO,
 The issue will attract retail said CIL chairman Partha Bhattacharya.
 He also said that the company will be listed on November 4, 2010.
 The IPO is set to open for subscription on October 18 and will close
on October 21, 2010.
 The company is offering 63.16 crore equity shares through the issue.
 As per draft prospectus, CIL is the largest coal producing company in the
world.
 Based on raw coal production of 431.26 million tons in fiscal 2010.
 It is also the largest coal reserve holder in the world based on reserve
base as of April 1, 2010.
 Qualified institutional buyers can subscribe to 50 % of the shares,
 retail investors 35% and high net-worth individuals the remaining 15%
 The company is offering 630 million shares with a face value of Rs 10 each.
The issue closes on 21 October.
 LIC are likely to invest Rs 4,000 crore in the Coal India Ltd initial public
offering (IPO) — India’s largest ever — which opens on 18 Octomber.
 Life Insurance Corporation of India (LIC) alone will probably pick up shares
worth around Rs 3,000 crore, industry sources estimate.
 The government is selling 10 per cent of its current 100 per cent stake in the
company.
 News analysis
 LIC invests 4000 crore so there should be an enthusiastic response
from insurance companies of India
 There is positive response by NSE & BSE to issue IPO in the
market.
 Coal India Ltd.'s $3.43-billion initial share sale got off to a strong
start Monday, with investors bidding for 13% of the shares on
offer in the country's largest maiden stock issue in the first two
hours.
LIFE INSURERS MAY INVEST RS.
4,000 CRORE IN COAL INDIA IPO

Source: Business Standard

Date: 18th October, 2010

• LIC alone will probably pick up shares worth around Rs.

3,000 crore
• LIC plans to invest Rs. 60,000 crore in equities during the
current FY 2010-11.
• In the first six months, LIC has invested around Rs. 20,000
crore in equities.
News in Details

 Coal India is offering 630 million shares with a

face value of Rs. 10 each.
 The issue closes on 21st October.
 The price band for the IPO is fixed at Rs. 225-245.
 Retail investors and Coal India employees have
been offered a discount of 5%.
 QIB can subscribe to 50% of the shares, retail
investors 35% and high net-worth individuals 15%.
 Analysis
 Company supplies 82% of the coal required in the country and
is considered to be the world’s largest coal-mining company.
 It is the lowest cost producer of coal in the world (about $ 12
per tonne).
 According to IIFL Research, the coal shortfall in the country is
set to widen from 65 million tonne (MT) in 2009-10 to 155
MT by 2012-13 and 277 MT by 2016-17.
 Company’s operating margins 27%, ROE 44%, Net Profit Rs.
9,829 crore, EPS Rs. 15.6 and virtually zero debt status.
 It has accumulated cash and has a bank balance of 39,000
crore.
RBI INTERVENES TO STEM
UNABATED RISE IN RUPEE

Source: Business Standard

Date: 11th October, 2010
NEWS OVERVIEW
 Rupee moved to 25 year high to 44.10 per
dollar
 RBI will intervene by buying 400$ from the
market
 Their intervention will be to keep liquidity
conditions consistent with activity in the
real economy and to maintain financial
stability
 Overseas funds have invested $21.4 billion
in local stocks and $10.5 billion bonds
NEWS ANALYSIS
 Foreign exchange reserves have risen to $294
billion
 The rupee has gained about 5.7 per cent this
fiscal year
 Foreign exchange dealers anticipate another
$2 billion inflow when state-owned Coal India
hits the market with its initial public offering
 Markets are going to be volatile because of
supply mismatch
Coal India IPO subscribed 1.71
times on second day

 Source: Business Standard

Date : 20-10-2010
OVERVIEW

 India's largest IPO in history

 Looking for more than 15000cr
 Over Subscribed 1.71 times in second day
 Good response from qualified institutional
buyer.bid for 869.33million against
284.23millon
Analysis

 Due to this IPO Sensex moving down slight as

investor pulling out their money for this IPO
 It is assumed that insurance company may
invest in this
 Also assumed that some company may buy
this share through secondary market if not
able to get from IPO