Bharat Coking Coal's initial public offering has witnessed overwhelming investor response as it enters its final day of subscription on January 13. The issue, which opened on January 9, has attracted significant interest across all investor categories, with grey market indicators suggesting strong listing performance potential.

Subscription Performance and Investor Response

By the end of the second day of bidding, the IPO achieved remarkable subscription levels across different investor categories:

The strong response from non-institutional investors, who subscribed nearly 96 times their allocated portion, demonstrates significant market confidence in the company's prospects.

Pricing and Grey Market Premium

Bharat Coking Coal has set a price band of ₹21 to ₹23 per share, making it accessible to retail investors with a minimum lot size of 600 shares, requiring an investment of ₹13,800 at the upper price band. The stock currently commands a grey market premium of ₹10.60, suggesting an estimated listing price of ₹33.60 based on the upper price band of ₹23. This indicates potential listing gains of approximately 46.09% per share, though grey market premiums remain volatile and reflect unlisted market sentiment.

Issue Structure and Shareholding

The IPO represents an entirely offer-for-sale transaction through which Coal India is divesting a 10% stake in its wholly-owned subsidiary. Key details of the issue structure include:

Business Operations and Growth Plans

Bharat Coking Coal stands as India's largest coking coal producer, commanding approximately 58.50% of domestic output in FY25. The company's operations are strategically located in the Jharia coalfield in Jharkhand and the Raniganj coalfield in West Bengal. According to Manoj Kumar Agarwal, Chairman and Managing Director, the company currently produces 40.50 million tonnes annually and has ambitious plans to scale production to 56 million tonnes by 2030.

The growth strategy encompasses several key initiatives:

• Expanding open cast mining operations
• Reviving underground operations using modern technologies including continuous miners
• Monetising old and stopped underground mines
• Amalgamating smaller open cast mines into larger, more efficient operations

Timeline and Market Listing

IDBI Capital and ICICI Securities serve as the book running lead managers for the issue. The IPO timeline progresses as follows:

The strong subscription numbers and positive grey market sentiment position Bharat Coking Coal for a potentially successful market debut, reflecting investor confidence in India's largest coking coal producer.

Bharat Coking Coal's highly anticipated stock market debut may face a short delay due to a market holiday on January 15, when stock exchanges will remain closed for Maharashtra municipal corporation elections. The settlement holiday could disrupt the IPO's post-closure timeline, potentially pushing the listing from the tentative January 16 date to January 17.

Impact of Market Holiday on IPO Timeline

The BSE announced in a circular that trading across equity, equity derivatives, commodity derivatives and electronic gold receipts will remain closed on January 15. More significantly, the day has been declared a settlement holiday, which typically affects banking and clearing operations during elections or major public events.

The IPO opened on January 9 and is scheduled to close on January 13. While allotment is expected to be finalized on January 14, the subsequent refunds and credit of shares originally planned for January 15 may get pushed to January 16 due to the settlement holiday. This domino effect could delay the listing by one day, though no official communication has been issued by the company or exchanges regarding a revised listing date.

Strong Investor Response Despite Potential Delay

The possible postponement has not dampened investor enthusiasm for the issue. The ₹1,071 crore IPO demonstrated remarkable demand, achieving full subscription within the first 30 minutes of opening on Day 1. By the end of the second day, the issue was oversubscribed over 25 times, with retail and non-institutional investors leading the charge.

In the grey market, Bharat Coking Coal shares were trading at a premium of approximately ₹11.00, representing nearly 46% over the upper issue price of ₹23.00, indicating strong expectations for healthy listing gains.

Company Profile and Market Position

Bharat Coking Coal stands as India's largest producer of coking coal and the only major domestic supplier of prime coking coal, a critical input for steel manufacturing. As of April 2024, the company held estimated coking coal reserves of around 7.91 billion tonnes, representing nearly 21.50% of India's total coking coal resources.

The company operates 34 mines across the Jharia coalfields in Jharkhand and the Raniganj coalfields in West Bengal, regions with established coal infrastructure and proximity to major steel plants. Ongoing investments in coal washeries are expected to improve the supply of higher-quality washed coking coal for efficient steel production.

Financial Performance and Valuation

For FY25, Bharat Coking Coal reported revenue of ₹14,401.00 crore and a consolidated profit of ₹1,240.00 crore. The business remains debt-free and cash-generative, despite some margin volatility due to pricing and cost dynamics.

Brokerages have taken a largely favorable view of the issue. Anand Rathi Research values the company at around 8.64 times FY25 earnings at the upper price band, while SBI Securities noted that at ₹23.00 per share, the issue is valued at an EV/EBITDA multiple of 6.40 times on post-issue capital. Both recommend subscription, with Anand Rathi focusing on potential listing gains and SBI Securities highlighting the company's dominant market share and reserve base.

The IPO consists entirely of an offer for sale by Coal India, with no fresh equity issuance. The shares are proposed to be listed on both the NSE and BSE, with investors required to bid for a minimum of 600 shares.