Coal India may trade in a PE band of 15-20 upto 2017 as its average compounded growth rate is likely to be 17%.
Assumptions: 1. 60% increase in profits during this period based on 7% average growth in capacity every year
2. 56% increase in profits due to a margin increase of 75% for 75% of capacity due to value addition by sale of washed coal.
3. 71% increase in profits due to increase in prices &increase in operational efficiencies due to listing. 74% of the capacity is for supplies to govt. institutions were maket price is not charged and price increase is based on inflation and other factors like increase in cost. As the demand for coal outstrips supply, the market price is likely to be much higher. The inflation rate of 8% is assumed as the average increase in prices p.a.
So profits may triple during this period which gives an average compounded growth of 17%.
There may be periods of stagnation in price like in Powergrid/ NTPC depending on the implementation of the Washery projects.
I read the draft prospectus of Coal India and it seem like they have put Rs 1Lac cap on the employee quota as well. So even employees can't buy shares for more than Rs100000. This is sad. Anyone know of any other IPO which had similar restrictions. From Draft Prospectus: "For Employee Reservation Portion: The Bid must be for a minimum of [•] Equity Shares and in multiples of [•] Equity Shares thereafter, so as to ensure that the Bid Amount by the Eligible Employees does not exceed Rs. 100,000. Bidders in the Employee Reservation Portion may bid at Cut- Off Price. Bidders may note that the total Bid Amount will be used to determine whether the Bid exceeds Rs. 100,000 or not."
Eventhough 5% discount is given for retail investors, we should apply at the price band of 225-245 only and only while allotment of shares the amount will be debited taking into consideration 5% discount (suppose if 245 is Issue price discovered through the book buidling process which I believe will happen for sure then you will get each share at 232.75 and the applicable amount will be deducted). But if u apply for a price lower than 245 and if the issue price is discovered at 245 then u won't get even a single share...so please think and act smartly to reep good gains.