The markets have run up a lot in recent times breaking all barriers. Right at the time comes a fat IPO. I have been seating on cash since 5860-5900 levles selling of 70% of my portfolio. I never (as predicted by my technical charts and oscillators and indicators) expected that markets will head upto 6250 and continue a prolonged bull run. Same thing happened in 2008 when markets were at peak came the RELIANCE POWER IPO. What happened after that is histroy and the wounds are still there for many. I have learnt that its good to buy when there is blood in DALAL STREET, not in Spring time like now. So I am trying to be patient trying to do value picks. Let me outline now why I will not invest in COAL INDIA IPO.
COAL INDIA is a very good company overall and has great prospect for long term investors. The price band is very lucrative 225-245. Those who will apply please do so in the higher band to get any given the tremendous euphoria and the results of last 5-10 listings shooting over 100/75% like Career Point. I do not expect such gala listing for COAL INDIA, it will be in the range of 260-275. Based on SOTP and DCF valuation of CIL's fair price comes out to be 345-365. Now given that on one demat you as a retail investor cannot put more than 1 lakh. I do not see retail investors getting more than 50-100 units allocated in the IPO. Given the listing hike (provided market remains upbeat) this comes to a profit of average 1000-2000 rupees. This is too small given the stature of the company. I would take this kind of listing returns from a fake company like NU-TEK India. I also firmly believe that the government of india with the help of FIIs and DIIs are keeping the markets buyont ahead of PSU IPOs and FPOs. Markets have historically tanked in Decemeber-January. In this time it will not at all be any crash like 2008, but we cannot rule out NIFTY SPOT to come down to 5800-5600 during that time.
So my strategy in COAL INDIA will be not to invest in IPO. I will wait for the markets to tank and bring price to 225 and hold for 2 years. If markets continue up march and so does COAL INDIA, I will look for value pick else where. I will never chase it. This is exactly what I did with REC. Bought IPO at 90 and then markets crashed in 2008, REC crashed to 60. So I had to average out in that dip and finally sold off at 300. Those who are holding REC, continue to do so. The stock will be 650-800+ in 2 years.
COAL INDIA is a very good company overall and has great prospect for long term investors. The price band is very lucrative 225-245. Those who will apply please do so in the higher band to get any given the tremendous euphoria and the results of last 5-10 listings shooting over 100/75% like Career Point. I do not expect such gala listing for COAL INDIA, it will be in the range of 260-275. Based on SOTP and DCF valuation of CIL's fair price comes out to be 345-365. Now given that on one demat you as a retail investor cannot put more than 1 lakh. I do not see retail investors getting more than 50-100 units allocated in the IPO. Given the listing hike (provided market remains upbeat) this comes to a profit of average 1000-2000 rupees. This is too small given the stature of the company. I would take this kind of listing returns from a fake company like NU-TEK India. I also firmly believe that the government of india with the help of FIIs and DIIs are keeping the markets buyont ahead of PSU IPOs and FPOs. Markets have historically tanked in Decemeber-January. In this time it will not at all be any crash like 2008, but we cannot rule out NIFTY SPOT to come down to 5800-5600 during that time.
So my strategy in COAL INDIA will be not to invest in IPO. I will wait for the markets to tank and bring price to 225 and hold for 2 years. If markets continue up march and so does COAL INDIA, I will look for value pick else where. I will never chase it. This is exactly what I did with REC. Bought IPO at 90 and then markets crashed in 2008, REC crashed to 60. So I had to average out in that dip and finally sold off at 300. Those who are holding REC, continue to do so. The stock will be 650-800+ in 2 years.
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