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Buy Coal India: Target Of Rs 160: Sharekhan

Sharekhan is bullish on Coal India recommended buy rating on the stock with a target price of Rs 160 in its research report dated November 13, 2020.

Nov 15, 2020 / 11:29 AM IST
 
 
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Sharekhan's research repor on Coal India


Q2FY2021 operating profit/PAT at Rs. 3,975 crore/Rs. 2,948 crore, up 10% y-o-y and down 16.3% y-o-y was above our estimate due to Rs. 575 crore OBR write back and slight beat in FSA realisation at Rs. 1,412/tonne (up 3.9% q-o-q). Sharp increase in coal-based power generation by 9.5%/14.6% y-o-y in September/October bodes well for a recovery in coal offtake volume and would aid an earnings recovery (expect an 18% PAT CAGR over FY21E-FY23E with RoE of 42%). Management is hopeful of maintaining last fiscal’s dividend of Rs. 12/share (already declared interim dividend of Rs. 7.5/share) in FY2021, which translates into high dividend yield of 10%. Coal India is trading at an attractive valuation of 4.6x its FY2023E EPS (~64% discount to its historical average one-year forward P/E multiple of 12.7x).


Outlook


Hence, we recommend a Buy rating on Coal India with PT of Rs. 160.


For all recommendations report, click here


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Broker Research
first published: Nov 15, 2020 11:29 am

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