Buy Coal India; target of Rs 270: Sharekhan

Sharekhan is bullish on Coal India has recommended buy rating on the stock with a target price of Rs 270 in its research report dated May 08, 2023.

Broker Research

May 11, 2023 / 13:09 IST

Buy

26 Aug, 2025 12:21

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Sharekhan's research report on Coal India

Q4FY23 results were weak with a sharp 36% miss in consolidated PAT at Rs. 5533 crore (down 17% y-o-y) due to sharp 57% y-o-y rise in employee cost (given wage provision of Rs5,870 crore), miss in e-auction realisation and higher depreciation & tax rate. E-auction realisations disappointed as it declined by 10% q-o-q to Rs. 4,525/tonne (e-auction premium at 192% was lower versus 241% in Q3FY23). FSA realisations increased by 4.6% q-o-q to Rs. 1,550/tonne (4% above our estimate) and in-line coal offtake of 187 mt (up 3.7%/6.3% y-o-y/q-o-q) with FSA/e-auction volume at 167mt/16mt, up 6%/12% q-o-q. FY23 numbers were the best ever with PAT soaring 62% y-o-y; but we expect the same to moderate in FY24 given lower e-auction realisation due to recent fall in imported coal price. Having said that, overall earnings would remain resilient and above historical levels given strong coal demand from thermal power plants and better price discovery (single window for e-auction of coal and likely FSA price hike).

Outlook

Stock trades at an attractive valuation of 6.3x/5.6x its FY24E/FY25E EPS (close to trough valuation) and offers a high dividend yield of ~10%. Hence, we maintain a Buy with a revised PT of Rs. 270. Potential stake sale in Bharat Coking Coal Limited (BCCL) and subsequent listing would unlock value.

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