Central Mine Planning & Design Institute IPO is entirely an offer for sale (OFS) of 10.71 crore shares of face value of ₹2 each. The price band of the issue has been set at ₹163 to ₹172 per share, which means the overall size of the OFS is about ₹1,842.12 crore.

Central Mine Planning & Design Institute IPO: 5 key risks flagged in the RHP that investors should know

Central Mine Planning & Design Institute IPO: The initial public offering (IPO) of Coal India-backed Central Mine Planning & Design Institute will open for public subscription on Friday, March 20, and will conclude on Tuesday, March 24.

The issue is entirely an offer for sale (OFS) of 10.71 crore shares of face value of ₹2 each. The price band of the issue has been set at ₹163 to ₹172 per share, which means the overall size of the OFS is about ₹1,842.12 crore.

Coal India is the sole promoter and selling shareholder in the OFS.

IDBI Capital Markets & Securities Limited and SBI Capital Markets Limited are the book-running lead managers, while KFin Technologies Limited is the registrar of the IPO.

Meanwhile, the grey market premium (GMP) of the stock has declined further to the lowest level. According to grey market sources, the Central Mine Planning IPO GMP on Wednesday evening was ₹11, which suggested the stock could list at ₹183, a premium of 6% over the issue price. The highest GMP of Central Mine Planning stock was ₹24, according to grey market sources.

Central Mine Planning & Design Institute offers consultancy and support services for coal and mineral exploration, and mine planning and design services.

Here are 10 key risks flagged in the issue RHP (Red Herring Prospectus) that investors should know:

1. Top 10 clients contribute more than 90% revenue

As per the RHP, the company depends on its top 10 clients that have been contributing to more than 90% of its revenue from operations since FY23. The loss of any of these clients could adversely impact the business.

2. Policy risk

The company depends on government funding for the drilling and exploration activities. Any shifts in policy decisions, changes in fiscal priorities or budget reallocation may impact business, operations, and financial conditions.

3. Non-availability of credit ratings

The company has not received any credit ratings since FY23. It highlighted that the non-availability of credit ratings may increase borrowing costs and constrain access to capital and lending markets.

4. Manpower intensive business model

The business is manpower intensive. So, it may be adversely affected by work stoppages, increased wage demands by employees, or an increase in minimum wages.

Moreover, the company is subject to labour legislation and regulations, and any increase in wages and training costs could impact the company's financial condition.

5. Business sensitive to seasonal changes

The company's business is sensitive to seasonal changes. Seasonal variations, such as monsoon or extreme temperatures, can disrupt its activities and impact its business.

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