Coal India subsidiary files draft papers with SEBI: Will this IPO deliver standout performance?

Coal India subsidiary, Central Mine Planning and Design Institute Ltd (CMPDIL) has officially filed draft red herring prospectus (DRHP) with market regulator, SEBI for its initial public offering (IPO).

Last week, Coal India announcement plans to list two of its subsidiaries—Bharat Coking Coal Ltd (BCCL) and Central Mine Planning and Design Institute (CMPDIL). The company through exchange filing stated that book-running lead manager (BRLM) for the upcoming IPOs has already been appointed.

Central Mine Planning and Design Institute IPO issue is likely to be complete offer for sale of over 7.1 crore shares without any fresh issue component, which means the net IPO proceeds will go directly to selling promotor, i.e. Coal India. CMPDIL operates in the mining sector, offering consultancy services for coal and mineral exploration and mine planning.

The book-running lead managers for the IPO are SBI Capital Markets and IDBI Capital Markets. Following the announcement, Coal India shares are trading flat around ₹400.9 per share, with a day high of ₹403.55 per share and a day low of ₹398.30.

The Ministry of Coal has said earlier on plans to bring IPOs of two of the subsidiaries of Coal India, but timing of the IPO depends on the domestic stock market sentiments.

Will this IPO match performance of its parent company?

Coal India IPO which came in November 2010 was one of the biggest IPOs of that year. This IPO stands out as one of the few IPO success stories as the issue was subscribed over 15 times. Coal India shares delivered nearly 40% on its listing day compared to its issue price. Public issue was worth ₹15,200 crore, priced at ₹245 per share, the stock has delivered decent returns over the years.

Coal India stock price is currently trading at around ₹402 per share, representing gains of over 64%. Besides this, the company has paid dividends at regular intervals to its shareholders.

Coal India, which accounts for over 80% of domestic coal production, aims to unlock value for its shareholders through these new public issue. The Maharatna PSU has seven coal-producing subsidiaries and one technical and consultancy company.

In the fourth quarter of FY24, Coal India reported strong profit growth. Its consolidated net profit rose 12% YoY to ₹9,604 crore, while revenue from operations declined marginally by 1% YoY to ₹37,824 crore. The company’s board recommended a final dividend of ₹5 per share, bringing the total dividend for the fiscal year to ₹25.50 per share.