IPO Size: Rs. 1,071 cr, Entirely Offer for Sale (OFS)  

• By promoter Coal India (100% stake to drop to 90% post IPO)
• 10% issue reserved for Coal India shareholders

Price band: Rs. 21-23 per share

M cap: Rs. 10,711 cr, implying 10% dilution

IPO Date: Fri 9^th Jan to Tue 13^th Jan 2026, Listing Fri 16^th Jan 2026

Grey Market Premium (GMP): We are strongly against ‘grey market premium’ as it is an unofficial figure, against SEBI guidelines.

India’s Largest Coking Coal Producer

Bharat Coking Coal is a Dhanbad, Jharkhand based Min-Ratna company with 7,910 million tonnes estimated reserve (as of 1.4.24) across coalfields in Jharia, Jharkhand and Raniganj, West Bengal. While it aims for 56 mn tonnes production in future, FY25 production dropped 1% YoY to 40.5 million tonnes, with H1FY26 production dropping a massive 17% YoY to 15.75 million tonnes in H1FY26, from 19.1 million tonnes in H1FY25, partly due to monsoon.

Other Income Drives Profits

Other income such as treasury, provision written back for inventory, liability write back and miscellaneous income, contributes meaningfully to company’s bottomline. Of FY25 PBT of Rs. 1,703 cr, 35% or Rs. 600 cr, came from other income. Thus, FY25 PAT of Rs. 1,240 cr led to 9% net margin, and 6% operating net margin.

Unimpressive Financials

Due to lower production in H1FY26, fixed cost absorption was poor, leading to 82% drop in PBT to Rs. 199 cr and PBT margin contraction from 16% in H1FY26 to just 3% in H1FY26. If Rs. 652 cr other income is excluded, company post loss before tax of Rs. 453 cr for H1FY26 or negative 8% margin. 

Irrational Pricing

Parent Coal India is trading at a PE multiple of 8.4x, on trailing twelve months (TTM) PAT of Rs. 31,000 cr. If 25% contribution of other income to profits is excluded, the valuation multiple is 10.5-11x, excluding Rs. 20,000 cr net cash from Rs.2.6 lakh cr m cap. 

On the other hand, subsidiary Bharat Coking Coal’s IPO is priced at a PE of 17x, on TTM EPS of Rs. 1.32. This is expensive for a small-cap mining PSU. Even on FY25 EPS of Rs. 1.6, PE of 14x is unjustified.

Many PSU stocks drawn investor attention due to healthy dividend yield, but this theme is not applicable as Bharat Coking Coal is a non-dividend paying company.