CMPDI IPO: Why Coal India arm’s GMP dropped over 30% ahead of issue launch

The Central Mine Planning and Design Institute IPO is in focus ahead of its launch tomorrow. The consultancy arm of Coal India is seeing reduced traction in the grey market ahead of its initial public offering.

CMPDI IPO GMP sees sharp drop

The grey market premium has declined to Rs 11 from Rs 24 over the past few sessions, lowering expected listing gains. This reduces the expected listing gain from above 12% earlier to around 6.40% at present levels.

At the upper price band of Rs 172, the implied listing price is around Rs 183, which translates to a gain of about 6.40%.

The company operates as a key mining consultancy firm with deep links to Coal India and government bodies,

SBI Securities on CMPDI IPO

In a note released by SBI Securities, the brokerage house outlines key factors to watch in this IPO

1. Business focused on mining consultancy services

Central Mine Planning and Design Institute Limited operates in the mining consultancy segment with services across exploration, planning and related activities.

SBI Securities states, “Central Mine Planning & Design Institute(CMPDI), a wholly owned subsidiary of Coal India, is engaged in the business of offering consultancy and support services for the coal & mineral exploration and mine planning & design services.”

The report also states, “CMPDI offers a comprehensive range of services that encompass the entire spectrum of consultancy services… under one roof.”

2. Strong dependence on Coal India and government entities

The company’s operations are closely linked to Coal India and government bodies.

SBI Securities states, “CMPDI is a key consulting partner to Coal India and its subsidiaries across various domains and assists the Ministry of Coal in strategic decisions & initiatives.”

The report further notes, “The company’s client portfolio majorly spans multiple government bodies, state government entities and PSUs.”

3. Financial performance shows growth and strong margins

The company has reported growth in revenue and profit over recent years, along with strong margins.

SBI Securities states, “Historically, the company has recorded Revenue/EBITDA/PAT CAGR of 23.2%/48.2%/49.9% respectively over the FY23-FY25 period.”

The report also indicates that the company operates with no debt and maintains strong profitability metrics.

4. High client concentration

The report points out concentration in the client base.

SBI Securities states, “During FY25/9MFY26, the company derived 95.0%/93.8% of its revenue from its Top 10 customers.”

It further states, “During FY25/9MFY26, the company generated 66.0%/68.3% of its total revenue from Coal India Ltd and its subsidiaries.”

5. Dependence on government funding remains significant

The company’s operations depend on government funding mechanisms.

SBI Securities states, “The company is dependent on the Ministry of Coal for ‘Central Sector Scheme (CSS)’ funding… and on the Ministry of Mine for the ‘National Mineral Exploration Trust (NMET)’ funding.”

This ties project execution to government allocations.

6. Valuation in line with listed peers

At Rs 172, the valuation is comparable to peer companies in the same sector.

SBI Securities states, “At the upper price band of Rs 172, the issue is valued at FY25 P/E and EV/EBITDA multiples… based on post-issue capital.”

The report includes peer comparison with companies such as Engineers India Limited and RITES Limited operating at similar valuation levels.

7. Expansion into non-coal minerals outlined

The company plans to expand into other mineral segments.

SBI Securities states, “Going ahead, the company intends to broaden its service offerings to encompass comprehensive consultancy services for the exploration and development of non-coal minerals such as lithium, nickel, cobalt, copper, iron ore, bauxite, and manganese.”

8. GMP trend aligns with current valuation and demand levels

With the grey market premium at Rs 11, expected listing gains are around 6.40%. Earlier levels above Rs 20 indicated higher expected gains.

Current grey market data, along with valuation and business details in the SBI Securities report, indicate moderate expectations for listing.

Conclusion

Central Mine Planning and Design Institute enters the market with a mining consultancy business linked to government clients, supported by strong financial performance and a debt-free balance sheet.

SBI Securities presents a business with stable operations, strong margins and growth, along with risks related to client concentration and dependence on government funding.