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Typically, the ex-dividend days of companies see a lot of selling, amid a fall in their stock. However, Coal India Ltd (CIL) seems to have emerged as an exception.
A decline of about 10 per cent in CIL shares, as the company went ex-dividend on Friday, didn’t deter investors from pumping money into the counter. On a day when sellers were eligible to pocket the heavy special dividend and buyers lost in earning the extra tax-free income, the counter saw about half its traded shares in delivery settlement.
Such a high percentage of delivery-based trading was on an ex-dividend day that saw an outgo of about Rs 18,000 crore as dividend to investors from the coal giant’s cash-surplus account. Of this, 90 per cent went the government’s way.
Rikesh Parikh, vice-president (market strategy) at Motilal Oswal Financial Services, says, “One reason is tax-free dividends. From a long-term perspective, too, investors took interest in buying the counter, as the company has huge potential and can generate cash flows and capital requirement. Moreover, since the overhang of OFS (offer-for-sale) has gone, there are investors waiting to enter at sub-Rs 300 levels. With the kind of infrastructure growth requirement of the country, I see no negatives in the counter from a long-term perspective.”
On Monday, the CIL stock closed at Rs 269.55 on the National Stock Exchange (NSE), down 0.9 per cent.
On NSE, 47.67 per cent of the traded CIL shares were delivery-based; on the BSE, it stood at 78.62 per cent.
It appears that some of brokerages' upbeat calls on the counter, despite the one time special dividend, have boosted investors' sentiments.
Macquarie, for instance, is positive on the stock and has maintained an 'outperform' rating on Coal India while according to Deutsche Bank the stock looks attractive from the valuation perspective. Some of the technical analysts have not ruled out the possibility of the counter reaching a levels of Rs 310-315 in next 8-10 trading sessions.
Emkay, a Mumbai-based brokerage firm, in its report dated 18 December had recommended investors to hold Coal India with a target of Rs 317.
The record date for the payment of dividend is 20 January and the same will be credited to investors' accounts on and from 25 January.
| Delivery-based percentage of Coal India's traded shares | |
| Date | Delivery percentage (%) |
| 08-Jan | 42.73 |
| 09-Jan | 59.58 |
| 10-Jan | 68.75 |
| 13-Jan | 72.92 |
| 14-Jan | 40.7 |
| 15-Jan | 57.41 |
| 16-Jan | 66.1 |
| 17-Jan | 47.67 |
| Source : NSE | |
