Special: Coal India by Nishant Gauraw
Coal India is going to change the way we perceive large IPO’s. What most of analysts/ investors fail to recognize is the pricing point of other large IPO’s which led to crash of market. In fact IPO and Index connection have to be analysed quite extensively : 1st and most important what kind of money is being invested in an IPO. For this take example of RPL or Rpower in both those companies majority of IPO investors were normal market participants and not the “out of market guys” but in issues like NHPC , SBI(old time back) or other govt companies majority of investors are those whose money was not there in the market and because of these ipos their money will come to the market. 2nd Point: Large IPOs doesnt always bring down the market – history says that. DLF is the case here; at the time of DLF IPO it was the largest IPO ever to hit the Indian markets : result market rose almost 15% within 1 month from the date of start of the issue. 3rd Point : Other large issues were also included in the NIFTY and Sensex immediately the same way Coal India will be included but their inclusion resulted in erosion of earning from index thereby increasing the P/E and opposite is going to be the case of Coal India , which is going to add 10k cr earning to the NIFTY and Sensex just calculate the P/E after that and to maintain current P/E where Nifty should go!!!(if at all p/e matters lol!)
So overall this is not a subscribe/buy recommendation for Coal India (which i think is the best priced such large issue ever- u r getting almost 40 rs worth of assets for every 150 rs paid apart from p/e etc , so analyse the p/e by deducting such assets) , but instead giving opinion about the general market condition because of the IPO.
Anyways one thing with my best wishes for Dusshera : Market are NOT going to crash !! good bye