Coal India lists with a bang

Thu, 4 Nov 09:30 am

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Led by latest round of stimulus measures announced by the US central bank, the US markets closed strong yesterday. And the gains are now flowing to the Asian stocks, which have opened today on a similar note. As for the Indian markets, these have also opened in the positive. Shares in Coal India have listed on a strong note today. Engineering and metal stocks are leading the gains currently

The BSE-Sensex is trading higher by around 190 points (1.2%), while the NSE-Nifty is up about 45 points (0.8%). Mid and small cap stocks are also trading in the positive with the BSE-Midcap and BSE-Smallcap indices higher by around 0.5% each. The rupee is trading at 44.27 to the US dollar.

Coal India (CIL) made its debut on the bourses today and is currently trading at Rs 315. For retail investors who were offered the shares at a 5% discount, or at around Rs 232, the current gains stand at neatly 35%. Also, at the current price, the company's market cap stands at a whopping Rs 2,000 bn, or fifth highest in India. As a matter of fact, CIL raised a total of US$ 3.4 bn recently, in what was India's largest ever IPO. The government sold a 10% stake in the company. The success of this IPO has seemingly raised the government's hopes of raising another US$ 8-9 bn through IPOs/FPOs (follow on public offers) over the next few months. Another PSU, Power Grid, is set to issue shares through an FPO that starts on 9th November.

Energy stocks have opened today on a positive note. GAIL, Reliance Industries, and HPCL are leading the gainers' pack currently. Oil and gas transportation major GAIL announced its 2QFY11 results yesterday. The company grew its net sales by 30% YoY during the quarter. This was led by a 27% YoY growth in natural gas trading business. Reduced subsidy burden (down 24% YoY) also helped the company's numbers. GAIL's operating margins expanded to 17.9%, from 16.6% in 2QFY10. This led to a 40% YoY growth in operating profits. Net profit growth stood at 30% YoY. This was largely a result of a good sales growth and an improvement in operating margins. Lower interest charges also helped the net profit growth. This was however partially offset by higher tax charges. As for the first half 1HFY11, sales and net profits grew by 24% YoY and 32% YoY respectively. Going forward, the company has set itself on an ambitious expansion program. This will triple its fixed asset base in the next four years. Being the largest player in its field, GAIL is also likely to be a natural beneficiary of the increasing gas volumes in the country.