Phani Sekhar of Angel Broking told CNBC-TV18, "The divestment certainly looks to be the near-term headwind plaguing Coal India and since this has been in the air for sometime now, you are consequently seeing an underperformance from Coal India."
"Other than that if you look at fundamental parameters, they are improving. So the volume growth trajectory is improving. One is expecting quite a bit of improvement in the second half of this year. There is likely to be a pricing increase also somewhere around January-February. So a combination of all these things should at least fundamentally help Coal India and not to just mention the amount of cash that sits on its balance sheet," Sekhar said.
He further added, "As far as the divestment is concerned, one would remember that there was some kind of a strike by the trade unions fearing a reduction in government's stake. At that time, trade unions were assured that government stake would not be reduced without consensus. One is again hearing talks about divestment and one does not know what is the stance of the unions."
"So I think the last word is not yet out about whether divestment will happen, but alternatively, the government also has a recourse to tap cash from Coal India's balance sheet in the form of one time special dividend. The government holds 90 percent stake in the company. So on the balance, it is a good idea for investors to take advantage of these declines and accumulate the stock for the longer-term," he said.
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