Motilal Oswal is bullish on Coal India has recommended buy rating on the stock with a target price of Rs 335 in its research report dated November 02, 2017.
Motilal Oswal's research report on Coal India
Coal India's (COAL) dispatch growth remains strong, as it grew 12.2% YoY to 48.3mt in October 2017. YTD 7MFY18 dispatches are up 8.7% YoY (to 317mt), and are set to exceed our estimate of +6.8% growth for FY18. Coal inventories at power plants remain at critical levels (just ~6 days of consumption), which provides visibility of strong growth ahead. Production grew 6% YoY to 46.1mt. YTD 7MFY18 production increased 1.7% YoY to ~278mt. CCL, NCL and WCL delivered strong double-digit growth in dispatches. BCCL and ECL saw a decline, while MCL continues to struggle.
Concerns around grade slippage, e-auction price decline, deceleration in volume growth, and wage hike are now behind. Volume growth is accelerating, which will also drive operating leverage gains. Various cost initiatives like closing of underground mines, VRS, overtime compensation and others can drive upside to our estimates. The stock trades attractive at 7.3x FY19E EV/EBITDA and 5.4% dividend yield. The TP is INR335/sh. based on 8x FY19E EV/EBITDA. Buy.
For all recommendations report, click here
Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.