Coal India Limited shares have been credited to demat accounts on Sunday 31st October. Retail applicants who have applied for 400 shares have been allotted 199 shares. In the HNI category a similar 198 shares have been allotted to individuals who have applied for 4500 shares.

The cost of application for HNI’s who used borrowed funds was roughly Rs 17.85 per share assuming average cost of fund of 13% and number of days for which borrowed assumed as 9 days. Considering this the total cost for HNI applicant is Rs 245+17.85=262.85 which means he is still making a profit of roughly Rs 19.15 per share. Based on the above example an investor who applied for 4500 shares in the HNI category would have invested Rs 11,02,500 for the application. He would have borrowed this money for 9 days at 13% and paid Rs 3,534 as interest and received an allotment of 198 shares, making his interest cost Rs 17.85. His return after interest would be Rs 19.15 x 198 shares or Rs 3,791.70 assuming a price of Rs 282.

A retail investor investing Rs 98,000 would have received 199 shares and made Rs 37 plus retail discount of Rs 12 or a total of Rs 49 per share or Rs 9,751 per application. The mathematics is for all to see and it very clearly proves the point that if you are making an application of upto 10 lakhs it makes better sense to apply in the retail category.

With shares in demat account and refund happening today, Coal India is all set to list on Thursday the 4th of November.