Sharekhan has given Buy recommendation for Coal India with a target price of Rs. 225 in its research report issued on Mar 08, 2022

Sharekhan’s research report on Coal India

Coal India has multiple levers for improvement in profitability – 1) higher e-auction coal prices supported by a rally in global coal prices amid recent geopolitical tensions, 2) single e-auction window for coal auctions would remove coal price disparity and 3) potential FSA coal (85% of volume) price hikes of 10-11%. Coal India’s volume offtake has been robust, rising by 17% y-o-y in FY22YTD, and elevated international coal price would mean sustained high demand for domestic coal. We thus model a decent 7% coal volume offtake CAGR over FY21-24E. We increase our FY22/FY23/24 earnings estimate by 3%/20%/3% to factor higher e-auction premium assumption of 31%/55%/38% for FY22/FY23/FY24. For every Rs. 100/tonne rise in e-auction realisation our FY23E EPS increases by 3.5%.

Outlook

We maintain our Buy rating on Coal India with an increased PT of Rs. 225 (reflects an upwards revision in FY23E EPS). The stock trades at an attractive valuation of 4.6x its FY23E EPS (close to trough valuation) and offers a high dividend yield of 13-14%.

More Info

At 17:30 Coal India was quoting at Rs 179.00, down Rs 7.85, or 4.20 percent.

It has touched an intraday high of Rs 185.90 and an intraday low of Rs 177.00.

It was trading with volumes of 1,703,955 shares, compared to its thirty day average of 1,010,166 shares, an increase of 68.68 percent.

In the previous trading session, the share closed down 1.16 percent or Rs 2.20 at Rs 186.85.

The share touched its 52-week high Rs 203.85 and 52-week low Rs 123.45 on 06 October, 2021 and 19 April, 2021, respectively.

Currently, it is trading 12.19 percent below its 52-week high and 45 percent above its 52-week low.

Market capitalisation stands at Rs 110,312.84 crore.

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