Coal India rises over 3% after strong Q1 show; Jefferies maintains buy call

Shares of Coal India rose over 3 percent on Monday as investors cheered the company’s good show for the June quarter.

The stock touched an intraday high of Rs 284.40 and an intraday low of Rs 276.45.

Brokerage house Jefferies has maintained a buy call on the stock with a target of Rs 363. The research firm said that Q1 operating profit was 3 percent below estimates. Higher e-auction prices along with stable costs can drive 34 percent EPS growth in FY19. At 5x FY19 EBITDA, the valuation appears attractive, it said.

Brokerage: Bank of America Merrill Lynch | Rating: Buy | Target: Rs 335

The brokerage observed that operating profit and net profit were in line with estimates. Its profitability has risen despite dip in sales mix, it said, adding that strong volume outlook on power growth and restocking is seen.

Brokerage: Goldman Sachs | Rating: Neutral | Target: Cut to Rs 290 from Rs 293

Goldman Sachs said that net profit miss was largely driven by lower revenues and higher employee costs. Further, FSA volumes are higher due to higher coal supply to power plants, leading to lower e-auction sales.

The company reported massive 61.1 percent year-on-year growth in consolidated net profit to Rs 3,786.4 crore, driven by growth across the board. Profit in the year-ago period was at Rs 2,350.8 crore.

The consolidated revenue during the quarter increased 26.6 percent to Rs 24,260.9 crore compared to Rs 19,161.7 crore in the corresponding period last fiscal.

Coal India said production for the quarter grew by 15.23 percent year-on-year to 136.9 million tonnes and offtake rose by 11.7 percent to 153.5 million tonnes.

At 10:57 hrs Coal India was quoting at Rs 281.10, up Rs 5.10, or 1.85 percent, on the BSE.