Coal India Ltd (CIL), which plans to raise around Rs 15,000 crore from the primary markets through its initial public offering (IPO), expects its margins to grow, going forward.
The state-owned firm has set a price band of Rs 225-245 a share for the IPO that opens next week. The IPO, part of India's efforts to divest stakes in about 60 state-run firms in the next few years, will be India's largest-ever IPO. It is offering a discount of five per cent on the price for staff and retail shareholders.
According to CIL chairman Partha S. Bhattacharyya, the company would be focussing on expansion of profit margins in the future. "We will go for washing of coal in a big way. Margin growth will be dominant focus," he said.
He said that CIL expects its topline to grow by 15-16 per cent within the next two years. "We expect a topline growth of 15-16 per cent in two years and we are ramping up our capacity that is expected to grow by 15-20 per cent from 2013-14," he added.
The firm plans to price washed coal at 45 per cent higher than the current level.
It is targeting to sell 300 million tonnes per annum (mtpa) of washed coal, up from 13 mtpa at present. Also, the discount for washed coal will be less than on the unwashed category.
The offer opens on October 18 and closes on October 20. It is expected to list on November 4 on the stock exchanges. The firm is sitting on coal reserves of 18.9 billion tonnes.
The chairman said the firm has set aside a budget of $ 1.2 billion for overseas acquisitions this financial year.
Reacting to the IPO, ICICI Prudential Asset Management Company's deputy managing director Nilesh Shah said: "The Coal India IPO has been priced attractively. This will ensure inflow of money into the Indian market, especially from FIIs. The IPO will act as a catalyst to bring more FII investment into the market."
Added Bajaj Allianz chief investment officer Sashi Krishnan: " The IPO is reasonably priced. Investors would like to have exposure to the company's unique business as it enjoys a monopoly status today."
CIL is among the least cost producers with the current cost of production standing at $ 12 per tonne.