BCCL IPO Soars: Day 2 Subscription Hits 8x Amid Steady Grey Market Premium
Overview
Bharat Coking Coal's IPO saw robust investor demand on its second day, subscribing 8.09 times. A consistent grey market premium (GMP) of around ₹10.6 signals positive listing expectations, though analysts advise caution on GMP reliability. Anand Rathi highlights BCCL's dominant coking coal position, stable financials, and fair valuation, while noting steel cycle and commodity price risks.
Stocks Mentioned
IPO Momentum Continues
Bharat Coking Coal Limited's initial public offering continued to attract significant investor interest on the second day of bidding. The issue had garnered bids for 2,80,61,36,400 shares against 34,69,46,500 shares offered, translating to an overall subscription of 8.09 times by 9:56 am.
Grey Market Sentiment
The unofficial grey market premium (GMP) for Bharat Coking Coal stood at approximately ₹10.6 over the issue price on Day 2. Market observers view this steady premium as a sign of sustained demand, suggesting expectations of a successful listing provided broader market conditions remain stable. Analysts, however, emphasize that GMP is an informal indicator and can be volatile, not guaranteeing listing gains.
Anand Rathi's Analysis
Brokerage firm Anand Rathi identified Bharat Coking Coal Limited's dominant position in India's coking coal sector as a key investment driver. BCCL holds nearly 59% of domestic coking coal production, leveraging extensive reserves in Jharkhand and West Bengal. Coking coal's critical role in steelmaking, with limited substitutes, underpins long-term demand, especially as India's steel capacity is set to grow.
The company operates debt-free, demonstrates consistent revenue and profit generation, and benefits from Coal India Limited's backing, ensuring operational scale and policy clarity. At the upper end of the IPO price band, the stock's valuation is around 8.6 times FY25 earnings, which Anand Rathi deems fair.
Potential Risks and Investor Outlook
Despite the positive outlook, BCCL's performance is intrinsically linked to steel demand cycles, global coking coal prices, and government coal policies. Production disruptions, regulatory hurdles, and commodity price volatility could impact short-term earnings. Anand Rathi suggests the IPO might be more suitable for listing gains or medium-term holding for retail investors rather than aggressive long-term accumulation at current valuations.
