Accumulate Coal India; target of Rs 456; SPA Research

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26 Aug, 2025 12:21

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SPA Research 's report on Coal IndiaCoal India’s Q1FY16 results were inline with our estimates with topline coming in at INR 195 bn and PAT at INR 37 bn. While the coal production grew by 12.0% to 121 mn tonnes, coal offtake grew by 7.8% to 129 mn tonnes. Other income declined 34.1% to INR 14.5 bn. CIL will have to invest ~INR 35 bn to reach its 1 bn ton p.a. coal production target by 2020. While this might reduce other income in the near term, the company will generate much more return on the invested amount (~20-25% EBITDA and improvement in return ratios). We retain our Buy recommendation on the stock with a target price of INR 456.Outlook & ValuationGoI's annual target of 1 bn tonne coal production from Coal India by 2020 is achievable only if required evacuation infrastructure is set up. Coal India, in coordination with the Central & State governments, is successfully resolving key issues in coal production, which can be seen from 6.9% growth in coal production in FY15 (Avg. 1.8% CAGR between FY11-14). While these measures will result in topline growth, CIL must keep its cost in check to maintain profitability.We expect FY17 Coal production & Offtake of 577 mn tonnes (8.0% CAGR FY15-17E) and 598 mn tonnes (10.7% CAGR) respectively. Topline & bottomline is expected to grow at a CAGR of 11.9% & 13.9% between FY15-17E. We retain our Buy recommendation on the stock with a target price of INR 456, says SPA research report.For all recommendations,  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.

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