Buy Coal India; target of Rs 335: Motilal Oswal

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26 Aug, 2025 12:21

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Motilal Oswal's report on Coal India

We believe COAL will be able to negotiate an 18% wage hike in view of low inflation, high existing wages and pressure from power consumers to keep coal prices low. COAL’s wages have increased 405% in 12 years, the highest among the metal and mining companies. We expect employee cost to increase by less than 2% in FY18 after rising 14% in FY17 due to 3-4% natural net attrition.

Outlook

We are moving the valuation basis to FY19E and raising the target price to INR 335. At CMP, the stock has upside of 20%, which is in addition to 6% dividend yield and is very attractive compared to its cost of equity. Therefore, we upgrade the stock to Buy.

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