Coal news and updates

Government feels Coal India undervalued, may sell stake in two tranches

The government may split the proposed 10% stake sale in Coal IndiaBSE 0.73% ( CILBSE 0.73 %)
into two equal tranches, said a senior finance ministry official, after a meeting was held on Tuesday with finance minister Arun Jaitley on the
disinvestment road map.

The government is of the view that the share price of Coal India is undervalued. "The stock should sell at a further mark-up of Rs 100 per share," said the above quoted official, adding that investors during the road show have sought clarity on the allocation of coal blocks. Coal India closed at Rs 347.80 on the Bombay Stock Exchange ( BSE) on Tuesday. The stock hit a 52-week high of Rs 423.85 in June.

The government holds an 89.65% stake in the firm. "We have received a lot of feedback on the ONGCBSE 0.56% issue as well. However, no decision has been taken on the issue date of both Coal India and ONGC," the official said, adding that the government is closely watching the market scenario.

The government also intends to divest a 5% stake in ONGC. At current market prices, the proposed disinvestment in Coal India and ONGC may fetch the government around Rs 38,500 crore. The government has also lined up other firms, including SAIL and NHPC for disinvestment. The finance minister had in his maiden budget in July proposed a record target of Rs 58,425 crore from the sale of the government's stakes in companies. Of the total, Rs 43,425 crore was was expected from stake sales in government-controlled companies and Rs 15,000 crore from firms in which the government has a minority stake.

The finance ministry official said that the government is closely watching the OPEC meet slated to be held at the end of this month before it decides to go ahead with the stake sale in the oil firm.

Source: Economic Times