The mother of all IPO’s Coal India Limited is listing this morning. This IPO had garnered huge response from investors as was very well received. The price was fixed at the top end of the band of Rs 245. The grey market in this issue has been very active and the premiums have been fluctuating quite a bit. The premiums yesterday were in the region of Rs 42-45 indicating a price of roughly Rs 287 to 290.

My call on the listing price is somewhere in the range of Rs 280-283 with an upper price of a shade above Rs 300 and upto Rs 305. More about listing morning and end of day as the day unfolds.

The allotment of Coal India has been completed. The number of applications coming through ASBA or applications supported by blocked amount is increasing and in the case of Coal India the number was 3,13,175 applications for 684,00,61,150 shares. This means that almost all QIB and HNI applications are through ASBA and a mere 16-7-16.9% of the retail applications are through ASBA. The number seems to be picking up and is likely to increase going forward.

The number of retail applications at 16.269 lakhs for 45.40 cr shares means the average application size was a little over Rs 68,000 which shows the retail application size is improving.

Details of the same are given below.

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.