CMPDI IPO Struggles With Demand; Analysts Back Coal's Long-Term Value

COMMODITIES
Whalesbook Logo
AuthorIshaan Verma|Published at:
CMPDI IPO Struggles With Demand; Analysts Back Coal's Long-Term Value
Overview

Central Mine Planning and Design Institute's IPO is struggling on its final day with muted subscriptions across most categories and a falling grey market premium. Despite weak demand, analysts at Anand Rathi and Deven Choksey recommend it for long-term investors, citing its strong 37% return on equity, deep expertise, and backing from Coal India. IPO valuation at a high PE ratio remains a concern.

The Central Mine Planning and Design Institute (CMPDI) IPO closes today, struggling to attract investor interest. The issue remained undersubscribed on its final day, with an overall subscription rate of just 0.29 times. This weak demand is reflected in its grey market premium (GMP), which has now turned negative.

Subscription figures reveal investor hesitancy. Retail investors subscribed 0.21 times, employees 0.12 times, and Non-Institutional Investors (NIIs) 0.12 times. Qualified Institutional Buyers (QIBs) showed more interest, subscribing 0.62 times, but it wasn't enough to offset the overall weak performance.

Analysts See Long-Term Value Despite Valuation Worries

Despite the current market sentiment, research firms Anand Rathi and Deven Choksey Research have issued 'Subscribe' ratings, though with reservations. Anand Rathi suggests investors with a long-term view, noting the IPO is priced at the upper band, valuing the firm at 21.5 times its annualized FY26 earnings. They emphasize CMPDI's deep expertise in exploration projects, advanced infrastructure, and strong support from parent company Coal India.

Deven Choksey Research sees the IPO timing as strategic, capitalizing on the renewed global focus on coal. They point out that CMPDI trades at 21 times FY26 earnings but boasts a superior return on equity (RoE) of 37%, significantly outperforming peers like Engineers India and RITES (which have 15-24% RoE). This strong capital efficiency, combined with its dominant position in coal consultancy, could justify its valuation.

The Rs 1,842.12 crore IPO is structured entirely as an Offer for Sale (OFS). The price band was set between ₹163 and ₹172 per equity share. Investors are now weighing the company's fundamental strengths and strategic positioning against its valuation and the IPO's subdued market reception.

Disclaimer:This content is for informational purposes only and does not constitute financial or investment advice. Readers should consult a SEBI-registered advisor before making decisions. Investments are subject to market risks, and past performance does not guarantee future results. The publisher and authors are not liable for any losses. Accuracy and completeness are not guaranteed, and views expressed may not reflect the publication’s editorial stance.