Prabhudas Lilladher has given Accumulate recommendation for Coal India with a target price of Rs. 164 in its research report issued on Sep 08, 2021
Prabhudas Lilladher’s research report on Coal India
COAL India (COAL) delivered marked improvement on three counts in August. Resilient volumes despite lean month, continuous reduction in dues from State power generators and strong E-auction revenues were the highlight of month. There are concerns that COAL would be under pressure to divert high margin E-auction volumes to power utilities under linkage/Fuel supply agreement (FSA) due to increased power demand and low inventory at power plants. We see no risk to its E-auction volumes as 1) power demand would start receding in October, 2) seasonal increase in COAL’s volume movement and 3) major chunk of auction volumes are already dedicated for power utilities.
In light of better operational performance and strong outlook on E-auction realisations, we maintain Accumulate with TP of Rs 164 based on EV/EBITDA of 3x FY23e.