Moneycontrol Bureau
Shares of Coal India are up over 1 percent intraday on Friday even after its December quarter profit net profit declined. However, analysts are bullish on the stock hoping that fourth quarter may benefit from higher e-auction volume.
Nomura has a buy rating on the stock with a target of Rs 443 per share. It states that CIL’s 3QFY15 revenues were 2 percent above forecast on the back of higher contribution of e-auction revenues and marginally higher fuel supply agreements (FSA) realisation at Rs 1291 per tonnes. The state-owned company reported a 16.2 percent drop in its consolidated net profit at Rs 3,262.49 crore for the quarter to December, hit by higher expenses.
However, net sales of the company during the quarter were at Rs 17,762.88 crore, registering an increase of 4.9 per cent as against Rs 16,928.13 crore during the corresponding period last year.
Citi also suggests buying Coal India expecting that March quarter to benefit from higher e-auction volumes (lower costs), incentive premium and lower diesel prices. The brokerage also sees a possibiltiy of upward rerating as it is fairly insulated from controversies and likely policy changes.
Macquaire reiterates outperform rating with a 12-month target of Rs 420 per share on strong volume growth and earnings upgrades. It says that production growth remains impressive and despatches should pick up with a lag. The overhang of the 10 percent stake sale is behind us and the government’s focus on increasing production may surprise low expectations, Macquaire feels.
"Evacuation bottlenecks are increasing inventory and this could result in higher e-auction volume from 4Q15E. Margin expansion of Rs150/t in 4Q15 could be achievable with seasonally stronger despatch volume and an increase in FSA incentive income in 4Q due to higher supply under FSA. We are 3-4 percent below consensus for FY15E and consensus estimates could witness marginal downgrades,” it says in a note.
At 12:22 hrs Coal India was quoting at Rs 372.95, up Rs 4.20, or 1.14 percent on the BSE.
(Posted by Nasrin Sultana)
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