Bharat Coking Coal shares may debut at over 60% premium to IPO price, GMP suggests

Shares of Bharat Coking Coal Ltd., a subsidiary of Coal India Ltd., are set to list on the bourses on Monday, January 19. Based on grey market signals, the stock is expected to debut with gains of around 62%.

In the unlisted market, Bharat Coking Coal shares are currently trading at a premium of about ₹14.2, implying a grey market premium of nearly 62% over the issue price of ₹23.

However, grey market indications are speculative in nature and the actual listing price may differ materially from these levels.

Prashanth Tapse of Mehta Equities expects Bharat Coking Coal to list in the range of ₹32 to ₹35, translating into a premium of about 39% to 52% over the issue price.

From a valuation standpoint, Tapse said the IPO was reasonably priced, particularly for a low ticket issue, offering an attractive risk reward profile.

He added that the company's dominant market position, coupled with structural demand tailwinds from sustained steel capacity expansion, supports a constructive medium to long term outlook.

In a best case scenario of over 50% listing gains, Tapse advised allotted investors to book profits on 50% of their holdings while retaining the remainder to participate in long term value creation.

For non allotted investors, he recommended avoiding chasing the stock on listing day and waiting for post listing consolidation, given the likelihood of near term volatility in a cautious market environment.

Mahesh M Ojha of Kantilal Chhaganlal Securities said that while near term sentiment remains positive, investors with a longer time horizon may continue to hold the stock, keeping in mind commodity price cyclicality and sector specific risks.

Short term investors, he added, may consider booking partial listing gains and hold the remaining portion with a medium term perspective.

The Bharat Coking Coal IPO emerged as the second most subscribed PSU issue on record. The company narrowly missed becoming the most subscribed state run IPO after bidding closed on January 13.

As per final NSE data, the ₹1,071 crore issue was subscribed 146.8 times overall, with bids received for 5,093 crore shares against 34.69 crore shares on offer.

Institutional investors led the demand, subscribing their portion 310.8 times, with bids for 2,460 crore shares compared to 7.91 crore shares available.

Non institutional investors also showed strong interest, bidding for 1,532 crore shares against an allocation of 5.93 crore shares, resulting in a subscription of 258 times.

Retail participation was robust as well, with the retail portion subscribed 49.2 times. Of the total issue, 35% or 13.85 crore shares were reserved for retail investors, who placed bids for 682.3 crore shares.

At the close of bidding, the Bharat Coking Coal IPO attracted bids worth ₹1.17 lakh crore, making it the third most bid for PSU IPO, behind Coal India, which received bids worth ₹2.31 lakh crore in 2010, and NHPC, which garnered bids worth ₹1.41 lakh crore in 2009.

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