CIL falls below IPO price on share sale concerns
The Coal India Ltd (CIL) stock on Friday slipped below its initial public offering (IPO) price, after the government appointed merchant bankers to manage the company’s share sale. In intra-day trade, the stock touched a record post-listing low of Rs 238.35, before recovering about five per cent to settle at Rs 250.5 on BSE.
In October 2010, the Centre had sold 10 per cent stake in CIL through an IPO, at Rs 245 a share. To narrow its fiscal deficit for this financial year, the government is considering selling another five per cent stake in the coal miner.
On Thursday, the government appointed seven bankers, including Goldman Sachs, Credit Suisse and Deutsche Bank, to manage thestake sale in the company.
Experts said concern on further disinvestment in CIL by the Centre was weighing on the stock price. Typically, the market hammers the stocks of public sector undertakings on news of disinvestment. Government-run companies, including NTPC, Hindustan Copper and Steel Authority of India Ltd, have seen erosion in their market capitalization following news of disinvestment.