Investment expert Deven Choksey has issued a 'Subscribe' recommendation for the Bharat Coking Coal Ltd (BCCL) IPO, positioning the offering as suitable for long-term investors seeking defensive yield with growth potential. The recommendation comes as BCCL, a wholly-owned subsidiary of Coal India Ltd, prepares for its public listing.

Company Profile and Market Position

Incorporated in 1972 and conferred with Mini Ratna status, BCCL has established itself as a dominant player in India's coking coal sector. The company holds an estimated reserve of 7.91 billion tonnes as of April 2024, ranking among the largest coking coal reserve holders in the country.

Operations and Infrastructure

BCCL operates an extensive mining network spanning 288.3 sq. km across two key regions - Jharia in Jharkhand and Raniganj in West Bengal. The company's operational infrastructure includes 34 mines with diverse extraction methods to optimize production efficiency.

The company produces various grades of coking coal, non-coking coal, and washed coals primarily serving the steel and power industries. BCCL leads in coking coal washery capacity at 13.65 MTPA across 5 facilities, with expansion projects currently underway to enhance processing capabilities.

Investment Rationale

Choksey's 'Subscribe' recommendation emphasizes BCCL's potential as a defensive investment offering a 0.4% dividend yield while providing exposure to India's domestic coal sector growth. The investment expert targets post-listing stability with potential gains of 1.5-2x, positioning the stock as suitable for long-term portfolio allocation.

The company's strategic advantages include its substantial reserve base, dominant market position in domestic coking coal production, and backing from Coal India Ltd for technology and resources. Additionally, BCCL is exploring Coal Bed Methane (CBM) opportunities in two Jharia blocks, potentially adding to future revenue streams.

BCCL's IPO represents an opportunity for investors to gain exposure to India's critical coking coal sector through a company with established operations, significant reserves, and strong market positioning in the domestic coal value chain.

Anand Rathi has recommended a "Subscribe Long Term" rating for the Bharat Coking Coal IPO, acknowledging the company's strong market position despite concerns about full pricing at current valuations.

Market Leadership and Production Capacity

Bharat Coking Coal holds the distinction of being India's largest coking coal producer, with their production representing 58.50% of total domestic coking coal output in Fiscal 2025. The company operates with substantial reserves, holding an estimated 7,910 million tonnes as of April 1, 2024, positioning it among the largest coking coal reserve holders in the country.

The company's production portfolio includes various grades of coking coal, non-coking coal, and washed coal, primarily serving the steel and power industries. This diversified product mix caters to critical sectors of the Indian economy.

Operational Performance and Growth

The company has demonstrated impressive production growth over recent years:

Corporate Structure and Background

Bharat Coking Coal operates as a 100% subsidiary of Coal India Limited (CIL) and achieved Mini Ratna status in 2014. Established in 1972, the company was created specifically to mine and supply coking coal from strategic coalfields located in Jharia, Jharkhand, and Raniganj, West Bengal. The company has significantly expanded its operations since inception.

Valuation Analysis

At the upper price band, the IPO presents the following valuation metrics:

Anand Rathi notes that while the IPO appears fully priced at these levels, the company's market leadership position and growth trajectory support a long-term investment perspective. The brokerage's recommendation reflects confidence in the company's fundamental strengths despite premium valuations.