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Coal India Stake Sale May Spill Over to Next Fiscal

The 10 per cent stake sale in Coal India is likely to be deferred to next fiscal as the government wants to wait for stability in the equity markets for a better valuation.

Published: 17th January 2016 10:59 AM  |   Last Updated: 17th January 2016 11:00 AM   |  A+A-

Coal-reuters
By PTI

NEW DELHI: The 10 per cent stake sale in Coal India is likely to be deferred to next fiscal as the government wants to wait for stability in the equity markets for a better valuation.

"If we don't get the right price, we may not sell government shares in CIL this fiscal," an official told PTI.

Coal India shares are currently trading at Rs 318.20 a share, resulting in a notional loss of over 11 per cent to investors who purchased the equity at Rs 358 apiece in the disinvestment on January 31, 2015.

At current market price of Rs 318.20, sale of 63.16 crore shares, or 10 per cent stake, would bring in around Rs 20,000 crore to the exchequer.

The government had last sold 10 per cent in the blue-chip on January 31, 2015, at the floor price of Rs 358 apiece and garnered Rs 22,557 crore.

Foreign investors such as Fidelity, Wellington Management and BlackRock have already conveyed to the disinvestment department their reservations over Coal India stake sale at the current juncture as the stock is already beaten down.

Government has already shortlisted five Indian merchant bankers-- JM Financial, SBI Capital and ICICI Securities, Axis Capital and Kotak Mahindra Capital -- for managing Coal India stake sale.

In November last year, the Cabinet approved 10 per cent stake sale in Coal India.

The government currently owns 79.65 per cent in maharata PSU Coal India.

The stock market slump has wiped away investor wealth across spectrum, including metals and mining stock as global commodity prices have declined significantly.

CIL was listed on November 4, 2010 and its market value stands at over Rs 2 lakh crore.

As against the target of Rs 69,500 crore, the government has in current fiscal so far garnered Rs 12,700 crore. Due to volatile market conditions, the government has been able to sell stake in only four PSUs - IOC, PFC, REC and Dredging Corp.

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