Coal India’s share price has risen significantly in calendar year 2023, however experts and brokerage firms are forecasting further double-digit gains, indicating that the stock’s momentum is expected to continue.
As of the end of November 21, Coal India’s share price has jumped 48.4 percent this year, strongly outperforming the equity benchmark Sensex, which has gained just 8.4 percent in the same period.
Coal India share price hit its 52-week high of ₹359.80 last week on November 15. It plumbed its 52-week low of ₹207.70 on March 27 this year.
Coal India on November 22 announced that it has held an investor meeting on November 21 after which many brokerage firms kept their buy calls on the stock, expecting healthy upside potential.
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Brokerages remain positive on Coal India stock
A brokerage firm ICICI Securities maintained a buy call on the stock with a target price of ₹395, implying 18 percent upside potential.
“We attended Coal India’s analyst meeting on November 21 to discuss its Q2FY24 earnings and outlook. Key points (1) Production/withdrawal target for FY24/FY25 stands at 780mt/850mt, (2) e-auction volume in H2FY24 maybe 15 percent of production volume, (3) the capex target for FY24 stands at ₹16500 crores, (4) output improvement through the MDO route is contemplated, (5) investment of ₹24,750 crore has been earmarked for FMC projects, and (6) evacuation capacity is improved by developing rail infrastructure, in line with production plans,” ICICI Securities said.
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ICICI Securities believes rising e-auction premium (currently at 90 percent) and focus on volume growth bodes well for Coal India, however it said investments in diversification projects and their capital returns need to be closely tracked.
A brokerage firm Motilal Oswal Financial Services also maintained a buy call on the stock with a target price of ₹380, expecting 14 percent up in the stock.
“Coal India trades at an EV/EBITDA of 4.3x FY25E. We reiterate our buy rating on the stock with a target price of ₹380 (five times EV/EBITDA). We believe that Coal India is well placed to capitalize on the growth opportunity ahead. Any hike in FSA (Fuel Supply Agreement) prices after election will further boost the financial performance of the company,” said Motilal Oswal.
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A brokerage firm New Wealth Managementalso, maintained a buy call on the stock with a target price of ₹404, implying a 21 percent upside potential. The brokerage firm said it remains positive on Coal India’s earnings growth due to improved volume, higher e-auction premium and lower cost. In addition, Coal India intends to pay free cash flow post-capex as a dividend.
Nuvama believes the improved e-auction premium would be 118 percent for October 2023 compared to an average of 80 percent in Q2FY24 with higher volumes to drive earnings in the second half of FY24.
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Disclaimer: The views and recommendations above are those of individual analysts, experts and second-hand companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.
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Updated: 22 Nov 2023, 12:05 IST