Coal India IPO has invited unprecedented interest from investors of all size and types. Despite of being a large size IPO it got subscription of over 2 times in retail section and overall subscription of 15 times. The fact is that Foreign Institutional Investors and Indian Financial Institutes have shown very high interest. Now the question is what should be the ideal price of this IPO on listing day of 4th November 2010. In my opinion don’t expect astronomical rise in the price as it is a fairly large IPO which will require great volume of trade before any significant rise in the price. Any gain which is above 12 percent would be enough on the first day. Don’t forget that another PSU IPO, NHPC went on to touch around Rs. 41 on the day of listing but after that it has been trading at prices much lower than its IPO price and it has been more than 1 year. The company is doing well in its sector and considered leader in Hydroelectric power companies.
Coal India IPO can also have similar fate so it would be prudent from the part of retail investors to book profit on listing day don’t forget that even 12 percent profit would mean profit of around Rs. 7200 for retail investors who applied for the highest amount of shares in IPO (Rs. 98000). Book building. The exact amount of allotment for the highest retail bidders should be Rs. 49000.
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