Coal India takes top tag from RIL

Becomes largest firm on m-cap within 10 months of listing; likely to stay there for a while.

In less than 10 months since making its debut on the stock exchanges, government-owned Coal India (CIL) has moved past Reliance Industries (RIL) to become the country's largest company in terms of market capitalisation (m-cap). This is the first time since 2007 that a public sector entity has occupied the top slot on the bourses.

Wednesday, its shares gained 2.6 per cent or Rs 10.25 to close at Rs 397.85, pegging the m-cap at Rs 2.51 lakh crore. Meanwhile, shares of RIL lost marginal ground to close at Rs 754.80, bringing down its m-cap to Rs 2.47 lakh crore.
 

Returns	Reliance Inds	Coal India
One month	-12.95	7.86
Three months	-17.99	0.45
Six months	-20.84	30.53
Coal India listing*	-31.68	16.21
* Nov 4, 2010                    (Returns as on Aug 17, 2011) Data Compiled by BS Research Bureau

Market players say it is unlikely that CIL would be toppled in the near future. Investor sentiment is currently negative on RIL, which will delay a bounce-back in the share price, they add.

“Looking at the current situation, Reliance Industries is on the backfoot, as there are several issues keeping the company under pressure," says U R Bhat, managing director, Dalton Capital Advisors (India).” On the other hand, CIL has come up with good results and I believe further upside is possible. So, the differential (between the two companies' m-cap) is likely to continue."

The new order, however, would not change the weightage enjoyed by the two companies in the benchmark 30-share Sensex. The largest share is still with RIL, courtesy its larger free float. RIL enjoys a weightage of 9.82 per cent in the Sensex, significantly higher than Coal India's 1.82 per cent.

According to exchange norms, the weightage of a company in the index is based on the quantity of non-promoter holding. After the CIL divestment, the Union government holds 90 per cent stake, leaving only 10 per cent of the shares for the market. The promoter holding in RIL, on the other hand, is less than 45 per cent, making its free float much higher.

CIL made its debut on the bourses on November 4, 2010. The stock has gained 62 per cent since listing, when compared to its issue price of Rs 245.

RIL, in the same period, has seen its m-cap erode 32 per cent due to negative news flow on issues ranging from family feuds, regulatory probes on insider trading charges and the Comptroller and Auditor General of India rapping its role in inflating project costs at the Krishna-Godavari oil and gas fields.

The government-owned Maharatna firm, meanwhile, has seen its profit posting impressive growth. Earlier this month, it reported a 64 per cent jump in consolidated net profit at Rs 4,143 crore for the first quarter ended June 30. It had posted a consolidated net profit of Rs 2,525 crore in the April-June period of 2010. Net sales in the first quarter also increased 26.8 per cent to Rs 14,499 crore from Rs 11,435 crore in the same period in 2010-11.

Coal production, meanwhile, in the quarter ended June 30 was marginally up one per cent to 96.3 million tonnes (mt) over 95.15 mt for the same period in 2010-11. The offtake of coal during the quarter increased to 106.25 mt, over 101.05 mt in the corresponding period of 2010-11. CIL has fixed a target of 452 mt production for the current year.

"We have already become the number one public sector company and now we are working on becoming the number one firm in the country, profit and turnover-wise as well. It is just a matter of some years," CIL chairman N C Jha told PTI.

He added the company was making continuous effort to scale up its operations, despite issues like environmental clearances affecting it.