The offer for sale (OFS) for Coal India, which opened on Wednesday for non-retail investors, garnered a solid response, with over 8 times bids worth about ₹19,000 crore.
The government is selling over 12.32 crore, or up to 2% stake, in the Maharatna PSU at a floor price of ₹412 a share, suggesting a discount of 11% from Tuesday’s closing price of ₹458.15. The issue includes a green-shoe option of 1%, which the government has decided to exercise, according to a post by Department of Investment and Public Asset Management (DIPAM) secretary Arunish Chawla.
The non-institutional investor bid at an indicative price of ₹436.70, much higher than the floor price.
Coal India OFS will now open for retail investors on Friday.
Should retail investors apply for Coal India OFS?
Retail investors looking to apply for the offer must understand that, apart from being a high-dividend-yielding PSU stock, the company is emerging as a key power play amid the rising demand during the peak summer season. The Maharatna PSU stock has a dividend yield of 5.70%, according to Trendlyne data.
That said, it faces certain challenges ranging from government regulations to commodity-linked costs.
Sunny Agrawal, Head of Fundamental Research at SBI Securities, said that Coal India is a strong cash-generating and high dividend-yielding PSU backed by India’s energy demand. Given its monopolistic nature, “CIL is well-positioned structurally, given that India remains heavily dependent on coal for electricity generation, coupled with a continuous rise in power demand,” he said.
Over the past week, India’s peak power demand registered new successive highs to ultimately reach a record 270.8 GW on 21st May’26. According to the Union Ministry of Power, around 34% of the power demand was met by Renewable Energy (including hydro), meaning that coal-based thermal power remained the mainstay.
Against this backdrop, Aggarwal said that the newly announced OFS for Coal India by the government provides an attractive opportunity for investors to ride on the country’s rising power story. “In our view, India’s continued reliance on coal-based thermal power and rising power demand underpinned by economic growth, industrialisation, and increasing power consumption, presents a relatively stable medium-term outlook for CIL’s volumes and revenues,” he noted.
However, he flagged that CIL is not a high-growth story given the mature nature of the business and increasing penetration of non-carbon-intensive energy alternatives. BSE data shows that Coal India shares have risen almost 16% in a year and 22% in six months. On a longer time frame of five years, it has given a multibagger return of 220%.
Meanwhile, for Harshal Dasani, Business Head at INVAsset PMS, retail participation in Coal India OFS has to be selective, not automatic. He said that Coal India remains a cash-generating PSU with dividend appeal, but this is still a regulated, commodity-linked business exposed to wage costs, government stake-sale supply, production volumes and the long-term energy transition.
According to Dasani, Coal India OFS may suit portfolios seeking income and PSU exposure, provided the market price remains meaningfully above the floor price. “It is less suitable for investors chasing a short-term arbitrage,” he opined.
Disclaimer: This story is for educational purposes only. The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
