As stock markets closed at a record high on Diwali eve, the government-owned Coal India Ltd (CIL) share price closed 39.7% high at Rs 342.6 on its debut day. The shares had opened at a 17% premium on listing and closed with a market capitalisation of Rs 2.16 lakh ($48.6 billion) crore.
As per today’s closing price, Coal India would become the fourth most valued company in India behind Reliance Industries, ONGC, and SBI and ahead of IT giants TCS and Infosys besides NTPC, which were valued higher at the time of Coal India’s issue. Coal India’s closing market cap of 2.16 lakh crore is more than TCS’s market cap of 2.09 lakh crore today and just shy of SBI’s 2.18 lakh crore value.
The markets were also in a Diwali mood today, closing at an all time high of 20,893 points, up by 2.09%. The previous highest close for the Sensex was 20,873 reached on January 8, 2008.
The public offer of Coal India, the biggest public issue ever in India that raised over Rs 15,000 crore, was oversubscribed over 15 times with investors applying for shares worth over a whopping $52 billion, a new record for Indian primary market. This had made a bumper listing a foregone conclusion.
On the one hand a good listing of Coal India is expected to draw fresh FII money into local stock markets, it could also shake up the constituents of Sensex/Nifty in the coming months. Although there are no coal companies in the 30-stock benchmark index, it will join Hindalco, Sterlite and Jindal Steel (which is more of a iron ore play than steel) among others within the metal & mining pack.
This group may well surpass FMCG and possibly even capital goods in the Sensex sectoral weightage after three months which is a minimum period of listing history to become eligible for entering the indices. However, given that it ranks amongst the top ten of BSE listed firms, the minimum three months listing criteria may be waived off for Coal India.
A navratna company, Coal India is the world’s largest coal producer with over double the reserves compared to the second largest coal firm US-based Peabody Energy. It accounts for around 82% of India’s total coal production and the government that owns 100% stake pre issue diluted its holding by 10% as part of its disinvestment programme to raise money for reducing fiscal deficit.
Now three of India’s top five most valued companies are government controlled.