Travesty, if retailers shy away from Coal India IPO: Udayan

The Coal India IPO has seen heavy-duty demand. India's biggest IPO has been subscribed at 11.4 times on day 3. The QIB book which closes today has seen blockbuster demand of over 24 times. The response has been quite unprecedented in Indian capital markets’ history. Retail and non-institutional investors' portion got subscribed 0.79 times and 1.38 times, respectively.

The issue has seen a total demand of USD 35 billion. It has received bids for 656.15 crore equity shares as against the issue size of 63.16 crore shares. The issue will close on October 21 for retail investors, NIIs and employees.

CNBC-TV18’s Udayan Mukherjee felt though response was always expected to be good for the issue the numbers are quite staggering. “About 25 times on the QIB book, I was expecting 15 times odd at best but 25 times on that bigger book, so you got USD 38 billion. That is the number of money, amount of money which has been put in I think it is overwhelming and it tell you that you get good quality paper out at a good price most importantly because the same global investors were all around through the year. They had bigger issues not as big as Coal India like NMDC, which was an opportunity which the government let pass. There was NHPC but you did not see this kind of subscription at all. A lot of global investors complaint that the pricing was too steep and they chose to stay away. But finally we have got this right. We hope the government gets enthused by this and subsequent issues they actually offer a global investors stock at attractive prices because there will be many more big issues like NMDC etc, which will all come about. So I think this is a seminal event. The fact that one Indian IPO can attract USD 38 billion of cash,” he said.

He further added, “It has put end to a lot of hope or fears that we always had in the market that every time we get a 2-3 billion dollar kind of issuance it will automatically chock the secondary market. Coal India tells you that should not be the case. For good quality paper, new money will come to India and you will get huge amount of subscriptions. I am very bullish at what is happened with the Coal India. I think more importantly you will see a huge amount of oversubscription for HNIs.”

Explaining the problem faced by retail, Mukherjee said, “Since the amount is fixed you need for oversubscription a huge number of people to come in and bid. The same is not true for HNIs or QIBs there the money is important. So I think HNIs oversubscription will be absolutely staggering and very little allotment will be got by a lot of the HNIs who are leveraging and bidding. On retail, I think that is the test—how many new investors can Coal India convert? I still think today being the last day if it is not too late a lot of people should come in and start looking at this issue and it would be a travesty if some part of retail is under subscribed or retail does not get oversubscribed because I think they would be passing of an opportunity.”