The IPO, priced in the Rs 21 to 23 range, opens on January 9 and closes on January 13. At the upper end of the band, BCCL will command a post-issue market capitalisation of about Rs 10,711 crore. The issue is entirely an offer for sale by promoter Coal India, which will pare its stake to 90% from 100%.
Here are five reasons why SBI Securities says subscribe to the Bharat Coking Coal IPO.
1) BCCL is India’s largest producer of coking coal and the country’s only meaningful source of prime coking coal. As of April 2024, it held estimated reserves of around 7.91 billion tonnes, accounting for roughly 21.5% of India’s coking coal resources.
2) In FY25, the company contributed nearly 58.5% of domestic coking coal production, operating 34 mines across Jharkhand and West Bengal, according to the offer documents.
Brokerage SBI Securities says the company’s strategic importance stems from India’s widening coking coal demand supply gap, driven by rising steel capacity.
“BCCL’s dominant reserve position and parentage under Coal India provide it with operational scale, logistical advantages and access to capital and technical expertise,” it said while recommending a subscribe for the IPO.3) A key growth lever is capacity expansion in coal beneficiation. BCCL 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, along with the renovation of the Moonidih washery. Once completed, total washery capacity is expected to rise to 20.65 million tonnes per annum, improving realisations and product mix over time.
4) Financially, BCCL has delivered sharp margin expansion over the past two years, aided by operating leverage and pricing. Between FY23 and FY25, the company reported revenue, EBITDA and PAT CAGR of 4.6%, 88.1% and 36.6%, respectively, though profitability moderated in the first half of FY26 due to cost pressures and seasonality.
5) At the upper price band, the issue is valued at about 6.4 times EV to EBITDA on post-issue capital, which SBI Securities views as reasonable given BCCL’s reserve life, dominant market position and improving washery profile.
“BCCL is India’s largest producer of coking coal with long reserve visibility and capacity expansion underway. At the cut-off price, we recommend investors subscribe to the issue,” SBI Securities said in its IPO note.
However, a few risks remain. A fall in imported coking coal prices could pressure domestic realisations, while the company remains heavily dependent on third-party contractors and PSU customers. Over the longer term, energy transition and tighter environmental norms could also reshape coal demand.
Still, in the near to medium term, analysts believe BCCL offers investors a rare listed exposure to India’s coking coal supply chain, closely tied to the country’s steel growth story.
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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times.)