The booster for the market was Coal India's public offer. “Coal India is the ideal public issue to strengthen the case of equity investing in India by foreign institutional investors (FIIs) and also retail investors,” said Amar Ambani, Head of Research, India Private Clients, India Infoline (IIFL). Coal India plans to raise up to $3.5 billion in the country's biggest initial public offering (IPO).
With a possible appreciation to $50 billion market cap over time, Coal India adds to the quality of stock available on Indian bourses. India's coal shortage will only widen, possibly in 2-3 years and Coal India is a direct play on this theme.
Lower earnings volatility, large undeveloped resource base and potential to improve realisations warrant a premium to global peers. The only concern relates to mine delays and environment degradation. “Long term investors can subscribe to this issue,” said Mr. Ambani. Fuelled by growing demand for power in the country, Chairman of Coal India Partha Bhattacharya said here on Wednesday that the company had set aside $1.2 billion for overseas acquisitions in the current financial year.