Coal India 2nd most valued co after RIL

MUMBAI: As the stocks of ONGC and Coal India went in opposite directions-ONGC's southward and Coal India's northward-in Tuesday's weak market, it brought about a significant change in India Inc's market capitalization table.

In less than a year since making a blockbuster debut on the bourses on November 5 last year, Coal India, the PSU major which is the world's largest coal miner, surpassed explorations major another PSU giant ONGC to become the most valuable state-run company. The Kolkata-headquartered Coal India also became the second most-valuable company in India, after the petrochem-to-explorations major Reliance Industries (RIL). Currently, the top three valued companies are RIL with a market cap of Rs 3 lakh crore, Coal India with Rs 2.5 lakh crore and ONGC with Rs 2.37 lakh crore.

Since debuting on the bourses on the eve of Diwali Day at the fifth spot in the market cap league table, the stock of the coal mining giant has gained 62% from its IPO price of Rs 245 to its current close at Rs 396 on the BSE. The outperformance of this newcomer on the Dalal Street becomes even more spectacular when compared with RIL and ONGC, and also with other benchmark indices. Since October 21, the day Coal India IPO closed, the ONGC stock has lost 18% and RIL 15%. Similarly, sensex is down 10% and nifty on the NSE is down 11% during the period.

The rise of Coal India on the bourses has also raised expectations among Dalal Street traders that it would soon be included in the elite sensex scrips on the BSE, although analysts pointed out even if it does enter the 30-share index, the stock will have a very low weight given the high government holding.

In terms of free float market cap-the method that BSE's index committee follows to determine the weight of a stock in most of its indices-Coal India stands at 21st position when compared with the current constituents of sensex. While calculating the weight of a stock in an index, the free float methodology considers the non-promoter holding in a company and assigns a weight to its market cap based on the same.

At Tuesday's close, Coal India had a free float market cap of Rs 25,400 crore, compared to Rs 47,500 crore of ONGC. This is because the government holding in ONGC is 74.1% while the corresponding number in Coal India is 90%.

"It is important to include Coal India in the sensex," said Jagannadham Thunuguntla, strategist & head of research, SMC Global Securities, a New Delhi-based broking house. "It's become a critically important company. So if it remains out of the index, it would miss the whole purpose of an index being a representative benchmark," he added.

As per BSE's rules for inclusion in the sensex, a stock should have a three-month listing history on the bourse and should have been traded on each session during this period.

The company should also have reported revenue in the latest four quarters from its core activity, the BSE website said. Once a company qualifies within these rules, the bourse's index committee has put in several other filters, like free float market cap, sector representation to finally arrive at the final list of 30 stocks, it noted.