BCCL IPO Review: Subscribe or Avoid? Price Band, Valuation & Risks
BCCL IPO looks like a value buy on FY25 data, but the H1 FY26 profit crash raises red flags. Our analysis breaks down TTM valuations and risks. Buy or avoid?
Bharat Coking Coal Limited (BCCL), a flagship subsidiary of Coal India Limited (CIL), is hitting the primary market with its Initial Public Offering (IPO). Given its dominant position in the coking coal sector and its crucial role in India’s steel growth story, should you subscribe to this “Mini Ratna” PSU?
In this BCCL IPO review, we will look at its business, financials, strengths, risks, and valuation to determine if it’s a buy or avoid.
BCCL IPO Details
IPO Date: January 9, 2026, to January 13, 2026
Price Band: ₹21 to ₹23 per share
Minimum Investment: ₹12,600 (at the lower price band of ₹21) or ₹13,800 (at the upper price band of ₹23)
Lot Size (600 Shares)
1. The Quick Verdict
Recommendation: SUBSCRIBE with Caution
Primarily for Long-Term Dividends
BCCL is a strategic national asset, holding the only source of prime coking coal in India. While the FY25 numbers suggest a massive bargain, the Trailing Twelve Months (TTM) performance indicates that the “deep discount” has largely evaporated due to a sharp profit slump in H1 FY26. However, at a P/E of ~17x (TTM), it still sits at par with the industry average while offering a superior competitive moat. It remains an attractive play for those seeking a steady PSU dividend stream and a bet on India’s steel expansion.
2. BCCL Valuation Check — Attractive vs. Fully Priced
The valuation of BCCL is a “tale of two halves.” Depending on whether you look at the record-breaking FY25 or the recent TTM (Trailing Twelve Months) performance, the picture changes significantly.
Market Cap at ₹23: ₹10,711.1 Cr | Enterprise Value (EV): ~₹11,191.2 Cr
P/E Perspective:
P/E Ratio: 8.64x for FY25 vs 17.41x for H1 FY26 TTM
FY25 earnings (EPS ₹2.66), the IPO is a steal at 8.64x.
H1 FY26 earnings crash (PAT fell ~83% YoY), TTM P/E has jumped to 17.41x.
Stock is no longer “cheap”—it is fairly priced relative to the industry.
EV/EBITDA Perspective:
EV/EBITDA: 4.75x for FY25 vs 7.76x for H1 FY26 TTM
Mining is capital intensive, making EV/EBITDA a vital metric. At 7.76x TTM, BCCL is reasonable, providing some comfort to value investors.
Asset Value (P/B):
P/B Ratio: 1.63x for FY25 vs 1.84x for H1 FY26 TTM
Net Asset Value (NAV) down from ₹14.07 in Mar-25 to ₹12.52 in Sep-25
At ₹23, you are paying 1.84x book value — a standard multiple for a high-moat PSU
Free cash flow:
FY25 — BCCL had a positive FCF of ₹26.31 Cr
OCF of ₹796.49 Cr minus Capex of ₹770.18 Cr
For an expected post IPO market cap of ₹10,700+ Cr — the free cash flow yield is not attractive
In simple terms: BCCL is spending almost everything it earns on new equipment, leaving very little actual cash for the business.
H1 FY26:
BCCL reported a negative operating cash flow of ₹334.930 Cr.
Cash was tied up in working capital.
Verdict on Valuation: Based on TTM H1 FY26 performance, the valuation is fair. If BCCL goes back to FY25 levels in FY27. From a longer-term the valuations will start looking attractive.
Caution: The IPO is presented to be very attractive based on FY25 earnings.
3. The “Good”: Why You Should Invest in BCCL
Strategic Near-Monopoly: BCCL accounts for 58.50% of India’s domestic coking coal production. As the only source of “Prime Coking Coal” in India, it is an essential partner for steel giants like SAIL and Tata Steel.
Strong Balance Sheet: Despite a recent spike in short-term working capital borrowings (₹1,559.1 Cr), the company has no long-term debt and remains fundamentally robust.
Dividend Yield: PSUs are mandated to pay 30% of PAT as dividends. Even with the TTM profit dip, the yield at a ₹23 entry price is expected to be healthy (Estimated 3% - 4%).
Modernization Moat: The shift toward Highwall and Longwall technology and the addition of new washeries (7 MTPA capacity coming up) are aimed at improving coal quality and margins, which should offset rising costs..
4. The “Bad”: Risks You Must Know
The H1 FY26 Slump: The sudden drop in H1 profit (₹123.8 Cr vs ₹748.7 Cr YoY) is a major red flag. While the RHP blames heavy monsoons, it also highlights the volatility and operational sensitivity of the Jharia mines.
100% OFS Structure: All IPO proceeds go to Coal India Ltd. BCCL receives zero fresh capital to manage its aging infrastructure or the ongoing Jharia fires.
Environmental & Safety Hazards: The Jharia coalfields suffer from legacy underground fires and land subsidence. This isn’t just an ESG concern—it’s a direct threat to production stability.
Contingent Liabilities: With ₹3,598.59 Cr in claims (primarily tax and royalty disputes), an adverse court ruling could significantly erode the company’s net worth.
Customer Concentration: 84% of revenue comes from the top 10 customers. BCCL is heavily reliant on the health and procurement policies of other state-owned power and steel utilities.
Final Thoughts
If you only look at the FY25 P/E of 8.6x, the BCCL IPO looks like an absolute bargain. However, a more responsible analysis using TTM metrics (P/E of 17.4x and EV/EBITDA of 7.7x) shows the stock is being offered at Fair Value.
Subscribe if you are looking for a defensive, dividend-paying utility stock and believe the H1 FY26 profit dip was a temporary, weather-related anomaly.
Avoid if you are looking for high-growth momentum or are concerned about the environmental liabilities and proceeds not being used for company growth.