Foreign investors such as Fidelity, Wellington Management and BlackRock have already conveyed to the disinvestment department their reservations over Coal India stake sale at the current juncture as the stock is already beaten down.
The 10% stake sale in Coal India is likely to be deferred to next fiscal as the government wants to wait for stability in the equity markets for a better valuation.
"If we don't get the right price, we may not sell government shares in Coal India Limited (CIL) this fiscal," an official told PTI.
Coal India shares are currently trading at Rs 318.20 a share, resulting in a notional loss of over 11% to investors who purchased the equity at Rs 358 a piece in the disinvestment on January 31, 2015. At current market price of Rs 318.20, the sale of 63.16 crore shares, or 10% stake, will bring in around Rs 20,000 crore to the exchequer. The government had last sold 10% in the blue-chip on January 31, 2015, at the floor price of Rs 358 a piece and garnered Rs 22,557 crore.
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Foreign investors such as Fidelity, Wellington Management and BlackRock have already conveyed to the disinvestment department their reservations over Coal India stake sale at the current juncture as the stock is already beaten down.
The government has already shortlisted five Indian merchant bankers-- JM Financial, SBI Capital and ICICI Securities, Axis Capital and Kotak Mahindra Capital -- for managing Coal India stake sale. In November last year, the Cabinet approved 10% stake sale in Coal India. The government currently owns 79.65% in maharatna Public Sector Undertaking (PSU) Coal India.
The stock market slump has wiped away investor wealth across the spectrum, including metals and mining stock as global commodity prices have declined significantly. Coal India was listed on November 4, 2010, and its market value stands at over Rs 2 lakh crore.
As against the target of Rs 69,500 crore, the government has in current fiscal so far garnered Rs 12,700 crore. Due to volatile market conditions, the government has been able to sell stakes in only four PSUs - Indian Oil Corporation (IOC), Power Finance Corporation (PFC), Rural Electrification Corporation (REC) and Dredging Corporation.
ALSO READ: Coal India to undergo major tech upgrade on lines of mining practices in US, Australia
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