Those who bought the Coal India IPO and booked a profit, made a fortune within days of listing. The hype and hoopla created around it succeeded in wooing the FIIs too. The listing effect has no doubt helped to maintain the stock's price above 300 levels for nearly two months now. However, we can't deny that it's gradually declining from Day 1 (CMP: Rs. 303.75).
So, what are the negative news which may affect Coal India's stock price? What are the obstacles this company has to go through before it may jump again? For those who missed out on buying the IPO, when is the right time to invest in the Coal India for long term?
The following points are not discussed by analysts till now, however, in few months their tone is going to change:
Hence, I would suggest our investors to buy Coal India when these negative factors start affecting its stock price. Also, please keep this thread alive by sharing any thing negative you hear about Coal India. I guess that the listing gain effect will be adjusted within 1 year when the FIIs will have booked the profit (due to above factors).
So, what are the negative news which may affect Coal India's stock price? What are the obstacles this company has to go through before it may jump again? For those who missed out on buying the IPO, when is the right time to invest in the Coal India for long term?
The following points are not discussed by analysts till now, however, in few months their tone is going to change:
- Now analysts are saying Coal India has huge reserves. I guess in few months, they are going to say Coal India experienced significant delays in obtaining relevant statutory and regulatory approvals for the acquisition of land and surface rights to commence mining activities because their reserves are in Assam and West Bengal." Land acquisition in these 2 states is not so easy. Remember example of Tata Motors in West Bengal and statement of Rahul Ghandi in Orissa. Apart from that, most of the Coal India reserves are situated in forest land and significant Procedural delays in obtaining the requisite approvals from the Ministry of Environment and Forests can't be ruled out. Also, there can be no assurance that Coal India will be able to acquire land and associated surface rights for all of its projects in the forest land.
- The Ministry of environment and forests is currently in discussion with the Ministry of commerce regarding a proposal for the demarcation of certain coal bearing forest areas in India based on the permissibility of using such land for mining purposes. If such proposal is implemented and forest areas are demarcated, it will restrict the mining activities. Then, what do you think will happen to the price of Coal India share in the market?
- The Jharia and Raniganj coalfields are susceptible to fire and land subsidence and pose a serious environmental, health and safety risk. I hope that the news of fire doesn't burn the share price in the coming summer.
- Whenever any increase in the transportation cost is announced in the rail budget, (trains are largest transportation vehicle for coal) the price of our Coal India share shall take a bow.
- Two of Coal India Subsidiaries, BCCL and ECL have been referred to the Board for Industrial and Financial Reconstruction (BIFR). (Means declared sick/diwalia ho gai hai). Interestingly, during the IPO issue days, the news of one of these two regaining the healthy status in couple of years from now was spread. Also, it was said that the other one will be healthy in few more years. Hype, hype and more hype. LOL
- Some of the Coal India assets and mining operations are located in areas of India that are exposed to risks of attack by Rebel groups (Maoists/Naxalites), such as in Jharkhand, Chhattisgarh, Westbengal, Orissa and Assam. Read this article for more insight.
- The use of alternative energy sources for power generation could reduce coal consumption by Indian electric power generators in the years to come, which may result in lower demand for coal.
Hence, I would suggest our investors to buy Coal India when these negative factors start affecting its stock price. Also, please keep this thread alive by sharing any thing negative you hear about Coal India. I guess that the listing gain effect will be adjusted within 1 year when the FIIs will have booked the profit (due to above factors).