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Buy Coal India: target of Rs 185: Sharekhan

Sharekhan is bullish on Coal India has recommended buy rating on the stock with a target price of Rs 185 in its research report dated September 13, 2021.

September 14, 2021 / 06:54 PM IST
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Sharekhan's research report on Coal India

Coal India is seeking government nod to hike coal prices by 10-11% under a long-term contract for power companies. For every Rs. 50/tonne price hike, Coal India’s PAT would rise by 10%. Rising e-auction premium (46% in Aug’21) and higher coal offtake (up 24% y-o-y during April-August) would help PAT clock an 18% CAGR over FY21-24E with potential for earnings upgrade on likely rise in coal realisations. Management aims to lower receivables by ~40% to Rs. 12,000 crore by Mar’22. This coupled with a rise in earnings would improve cash to ~Rs. 26,000 crore in FY22 and help sustain high dividend payment ratio at ~65%.


Improving earnings growth outlook, high RoE of ~45% and dividend yield of ~12% makes valuation attractive at 5.1x FY23E EPS (close to trough level and ~30% discount to Asian peers). Hence, we maintain a Buy on Coal India with an unchanged PT of Rs. 185.

For all recommendations report, click here

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on are their own, and not that of the website or its management. advises users to check with certified experts before taking any investment decisions.

Broker Research
first published: Sep 14, 2021 06:54 pm

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