Coal India's Chairman S. Narsing Rao had said he would be meeting with investors this week to gather pledges for a USD1.6 billion share sale as analysts lower their earnings projections for the company he heads. He would undertake a roadshow between Singapore, Hong Kong and the US to sell 5% of the company.
He would met with brokerage firms such as Jefferies LLC and Edelweiss Financial Services, who have both lowered their estimates for the state run coal firm for its year ending March 31. This was confirmed by data collated by Bloomberg.
According to Rao in a telephone interview, "Investors have many apprehensions. Concerns about profitability are exaggerated."
The initial share sale of Coal India was oversubscribed 15 times its original volume and now, has declined in value by as much as 32% from its peak price last May 2011. The decline was attributed to rising costs of labor as well as skyrocketing fuel expenses have all but diminished its profit margins. Another factor is the low growth rate of the Indian economy, dampening its demand for coal requiring many factories to cut back on production.
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