Buy Coal India; target of Rs 480: Motilal Oswal

Motilal Oswal's research report on Coal India

Coal India (COAL) reported production of 202mt in 3QFY25, reflecting 2% YoY growth. As a result, total production for 9MFY25 reached 543mt (+2% YoY), while dispatches stood at 556mt (flat YoY). Of the total dispatches, ~85% were supplied to the thermal power industry. The sluggishness in volume growth was primarily attributed to erratic monsoons in coal-producing states such as Odisha and Jharkhand, as well as disruptions caused by the general/state elections. Based on the 9MFY25 performance, we have modeled production of ~787mt (+2% YoY) for FY25E. Earlier, management had guided for production of 838mt in FY25E, driven by rising demand from the power sector (+80% share), with dispatches under eauction accounting for ~15% of total volumes.

Outlook

We reiterate our BUY rating with a TP of INR480/share, valuing the stock at 4.5x FY27E EV/EBITDA.