The scale of demand is interesting not just because of the headline figure, but also because it came at a time when broader equity markets have been volatile and investor risk appetite has been selective.
Strong subscription numbers
The final subscription data reflects overwhelming demand across segments. The issue was subscribed nearly 147 times overall. Qualified institutional buyers subscribed 311 times, while non-institutional investors bid 258 times the shares on offer. Retail investors applied for 49 times their quota, and even the traditionally steady employee category was subscribed five times. The shareholder quota saw strong interest as well, with subscriptions reaching 87 times.Market participants also point to the record number of applications, estimated at close to 90 lakh, as a sign of unusually broad participation for a PSU IPO. This depth of demand has reinforced expectations of a strong listing, particularly with the grey market premium hovering around Rs 10.6, implying a premium of roughly 46% over the issue price of Rs 23.
Why did investors pile onto the IPO
One of the primary reasons for the intense demand lies in Bharat Coking Coal‘s unique positioning and the scarcity value, according to analysts. The company is India’s largest producer of coking coal and the only meaningful domestic source of prime coking coal, a critical input for steel manufacturing. As of April 2024, it held estimated reserves of around 7.91 billion tonnes, accounting for over one-fifth of India’s total coking coal resources.
In FY25, Bharat Coking Coal contributed nearly 58.5% of domestic coking coal production, operating 34 mines across Jharkhand and West Bengal. Analysts say this dominant reserve position, combined with assured demand from the steel sector, gives the company a level of visibility that few commodity producers enjoy.Gaurav Garg, research analyst at Lemonn Markets Desk, said the subscription response reflects confidence in this monopolistic position. He noted that the scarcity value of a pure-play coking coal producer, coupled with steady long-term demand from steelmakers, has played a major role in driving investor interest across categories.
Valuation comfort amid volatile markets
Another key factor behind the strong response was valuation. At the upper price band of Rs 23, the IPO values Bharat Coking Coal at a market cap of around Rs 10,711 crore. On post-issue numbers, the valuation works out to roughly 6.4 times EV to EBITDA, which many analysts consider reasonable for a company with long reserve life, stable offtake and PSU backing.
Brokerages have highlighted that in a market environment where many stocks still trade at premium multiples, Bharat Coking Coal offered a combination of low absolute price, predictable cash flows and strategic relevance. This valuation comfort appears to have been particularly attractive for non-institutional investors, as reflected in the 258 times subscription in the NII category.
Institutional validation through anchors
The anchor book also provided early signals of institutional confidence. The anchor portion was fully subscribed at one time, with 11.88 crore shares allotted, raising around Rs 273 crore. This anchor participation helped set a positive tone ahead of the public issue and reassured other investors about institutional appetite for the stock.
According to Garg, the full anchor subscription offered early validation of the issue and likely encouraged aggressive bidding in the later stages, especially from high-net-worth individuals looking for listing gains.
Growth levers beyond coal extraction
While Bharat Coking Coal is often viewed primarily as a mining company, analysts point out that its future growth is increasingly linked to coal beneficiation and efficiency improvements. The company currently operates washeries with an owned capacity of 13.65 million tonnes per annum and is in the process of adding three new washeries with a combined capacity of 7 million tonnes per annum. It is also renovating the Moonidih washery.
Once these projects are completed, total washery capacity is expected to rise to 20.65 million tonnes per annum. This expansion is expected to improve realisations, enhance product quality and strengthen margins over time.
Rajan Shinde, research analyst at Mehta Equities, said Bharat Coking Coal’s leadership in washery capacity and logistics creates durable cost advantages and high entry barriers. He added that the company is well placed to benefit from India’s push towards import substitution in coking coal, supported by long-term demand from the steel sector.
Financial performance and near-term risks
Financially, Bharat Coking Coal has delivered strong margin expansion over the past two years, aided by operating leverage and pricing. Between FY23 and FY25, the company reported revenue, EBITDA and PAT compound annual growth rates of 4.6%, 88.1% and 36.6%, respectively. However, profitability moderated in the first half of FY26 due to cost pressures and seasonal factors.
Analysts caution that near-term performance may remain uneven, especially given weather-related disruptions and operational challenges inherent to underground mining. However, most brokerages view these headwinds as temporary and expect volumes and earnings to normalise over the next few years as capacity expansion and efficiency measures kick in.
What to expect from listing day
With a grey market premium of around Rs 10.6, the IPO is indicating a strong listing, though GMPs are not always reliable predictors. Still, the combination of heavy oversubscription, broad-based participation and valuation comfort suggests healthy secondary market interest.
Investors will also weigh the fact that the IPO is a 100% offer for sale of around Rs 1071 crore, meaning there is no immediate infusion of fresh capital into the company. While this is a consideration for long-term investors, analysts say it has not dampened sentiment given Bharat Coking Coal’s cash-generative nature and strategic importance.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)