Buy Coal India; target of Rs 280: Sharekhan

Sharekhan's research report on Coal India

E-auction premium remains high at 290% of notified coal prices. We expect it to remain firm in FY23 given limited supply for e-auctions, high international coal prices and single e-auction window (to remove coal price disparity). CIL’s coal production and offtake remain strong, rising by 21%/9% y-o-y to 253 mt/283 mt during April-August 2022 led by 18.6% y-o-y rise in supplies to power sector to 243 mt. We increase our FY23-24 earnings estimate to factor higher coal offtake and e-auction premium. CIL is focused on rationalising costs and aim to reduce manpower by 5% annually in the next 5-10 years, close unviable underground mines (13 mines already closed) and improve infrastructure for coal evacuation (building rail lines and mechanized coal transportation and loading system).

Outlook

We maintain a Buy on Coal India with increased PT of Rs. 280 (reflects upwards revision in FY24E EPS). CIL trades at an attractive valuation of 4.8x its FY24E EPS (close to trough valuation) and offers a high dividend yield of 12-13%.

More Info

At 13:48 hrs Coal India was quoting at Rs 234.50, down Rs 1.75, or 0.74 percent.

It has touched an intraday high of Rs 237.95 and an intraday low of Rs 233.55.

It was trading with volumes of 164,707 shares, compared to its thirty day average of 533,140 shares, a decrease of -69.11 percent.

In the previous trading session, the share closed down 1.05 percent or Rs 2.50 at Rs 236.25.

The share touched its 52-week high Rs 241.85 and 52-week low Rs 139.20 on 08 September, 2022 and 20 December, 2021, respectively.

Currently, it is trading 3.04 percent below its 52-week high and 68.46 percent above its 52-week low.

Market capitalisation stands at Rs 144,515.98 crore.

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Coal India - 090922 - khan