Coal India met coal unit sets price for $119 million IPO

State miner Coal India Ltd. will sell shares of its unit Bharat Coking Coal Ltd. in an initial public offering set to open on Friday.

At the top of the price band, which ranges between 21 rupees and 23 rupees per share, the sale will fetch 10.7 billion rupees ($119 million) for the company, valuing it at 8.7 times its earnings in the year through March 2025, according to a newspaper advertisement.

A public listing of BCCL would sharpen investor focus on Coal India’s coking coal unit within a portfolio otherwise dominated by thermal coal, while also underscoring the government’s push to improve governance at state-owned enterprises.

The company expects India’s demand for the fuel to rise annually at an average rate of 4% through 2030, as the nation adds more steelmaking capacity for infrastructure needs.

The sector is plagued by chronic operational issues that may make it harder for the miner to meet growing consumption. Parts of the Jharia mines in the eastern state of Jharkhand, one of BCCL’s richest deposits, have been caught in underground fires for at least a century. A 12-year plan started in 2009 achieved modest success in dousing the fires and relocating residents.

Bharat Coking also needs to improve the quality of its coal to find more buyers in the steel industry. While output has been rising, only a fraction of it is sold to mills, with the majority still feeding power stations.

The IPO opens for bidding on Jan. 9 and closes on Jan. 13. IDBI Capital and ICICI Securities are managing the sale.

Kolkata-based Coal India is also preparing to seek public offerings for the Central Mine Planning & Design Institute Ltd., the planning and geological services arm of the company. It may list all other subsidiaries by 2030, according to a PTI report.

(By Rajesh Kumar Singh and Paresh Jatakia)