Coal news and updates

Coal India shares declined as much as 5.2 per cent on Thursday, a day after the government scheduled a 10 per cent stake sale in the coal miner on Friday. The floor price for Coal India share sale will be announced after stock markets close today.

 

Analysts say the share sale price will likely be at a discount to the current market price to attract investors. Retail investors will get another 5 per cent discount on the bid price.

 

Global investment bank JP Morgan said Coal India is likely to announce lower dividends because of the share sale, another reason why shares are under pressure today.

 

The government will likely be able to raise over Rs 20,000 crore from Coal India divestment, making Friday's sale the biggest share sale in India's history. The stake sale will include at least 315.8 million shares in Coal India, with an option to sell 315.8 million more. Post the sale, the government's stake in the coal miner will come down to 80 per cent.Coal India share sale is aimed to narrow the fiscal deficit to a seven-year low of 4.1 per cent of gross domestic product in the year ending in March. A revenue shortfall has driven up the deficit to 99 per cent of the full-year target in the first eight months of the year, casting doubts on that pledge.

 

The Modi government was relying heavily on the asset sale programme with the government budgeting to raise nearly Rs 60,000 crore by selling small stakes in state-run firms. But to date, the government has managed to raise just Rs 1,715 crore through selling stakes in various PSU firms.

 

In the past, government share sales that have met with little institutional appetite. State-owned Life Insurance Corporation of India, India's largest equity investor, picked up almost three-quarters of the shares in SAIL sold by the government in December.

 

The government is also banking on the sale of a 5 per cent stake in energy explorer Oil and Natural Gas Corp, worth Rs 15,000 crore. The sale is scheduled before the end of the financial year, the oil minister said on Wednesday.

 

Last week the government invited bids from banks to manage a sale of 10 per cent stake in miner NMDC. It is also planning to sell 5 per cent in Power Finance Corp (PFC), Dredging Corp of India and Bharat Heavy Electricals, among others.

 

As of 10 a.m., Coal India shares traded 3.70 per cent lower at Rs 370 on the National Stock Exchange. The stock was the top Nifty loser and underperformed the broader Nifty, which traded 0.40 per cent down. 

 

 

Source: NDTV