Today the sensex rose by 485 points even though the IIP data for Aug were dampener. Anlysts are of the view that the market rose due to the improvement in sentiment due to favorable pricing of Coal India Ltd.
Also snalysts said Coal India, the world's largest coal company, was the best play on India's rising coal deficit, calling it an attractive bet at the price band of Rs225 to Rs 245 a share. Many valued it at Rs 265 to Rs 324 a share.
*Domestic brokerage Motilal Oswal recommended subscribing to the issue and set a target price of Rs 325 per share, nearly 33% higher than the upper end of the price band.
*Brokerage CLSA forecast a one-year forward value of Rs309-Rs324. "We believe that Coal India deserves to trade at premium to global coal prices in supply-deficit environment," the brokerage said in a note.
*Ahead of the price band announcement on Tuesday, Religare said it had arrived at a price band of Rs.265-Rs.315 per share.
"Over the next three years, we expect Coal India to register a substantial expansion in operating margins led by improved labour efficiency, focus on beneficiated coal and technology upgrades," Religare said in a note.
Coal India, based in the eastern city of Kolkata, holds a dominant position in the fast-growing Indian market. The state monopoly produced 431 million tonnes in 2009/10 and accounts for nearly 80% of coal output in Asia's third-largest economy.
Coal powers 75% of India's electricity output, and annual demand is expected to swell at 11%. The country, which faces a peak-hour power deficit of nearly 14%, plans to triple its generation capacity over the next decade.
The long-awaited IPO opens on Monday and is scheduled to close on Thursday.
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