Coal India shares remained under pressure on Wednesday, May 27, after Morgan Stanley assigned a target price of Rs 420 on the stock while flagging near-term volatility due to the government’s Offer for Sale (OFS) overhang.
The stock was trading at Rs 445.05, down 2.86% on the NSE. Coal India touched an intraday low of Rs 428.40 and a high of Rs 452.85 during the session. The stock’s 52-week range stands at Rs 368.65 to Rs 491.25, while the company’s market capitalisation was around Rs 2.74 lakh crore.
The pressure on the stock came after the Government of India announced plans to divest up to 2% stake in Coal India through the OFS route. The floor price has been fixed at Rs 412 per share, implying a discount of nearly 9.6% to the market price.
Morgan Stanley said the government could raise up to Rs 5,080 crore if the oversubscription option is exercised. The brokerage expects near-term stock volatility due to the discounted floor price and supply overhang from the OFS.
Coal India share price target
Morgan Stanley has assigned a target price of Rs 420 on Coal India.
The brokerage said Coal India may remain volatile in the near term as investors assess the impact of the government’s stake sale. The OFS includes a base offer of 1% equity with an option to sell an additional 1%, taking the total possible divestment to 2%.
A discounted OFS usually puts short-term pressure on the stock as market participants adjust prices closer to the offer floor price.
Disclaimer: The information provided is for informational purposes only and should not be considered financial or investment advice. Stock market investments are subject to market risks. Always conduct your own research or consult a financial advisor before making investment decisions.