Buy Coal India; target of Rs 525: Emkay Global Financial

Emkay Global Financial's research report on Coal India

Over the past 12-18 months, investors were enthused by a large-cap stock delivering volumes growth CAGR of 7-8%, alongside an improving demand outlook resulting in solid earnings momentum. We were also subscribed to this narrative for COAL; however, the growth air-pocket in recent months has weakened that thesis. We see the company missing its FY25 guidance by 35- 40mt (4.5%), and therefore, we reduce our estimate to 800mt. In addition, there has been news flow around progress on captive coal mines that could displace e-auction volumes. In our assessment, these captive mines could produce 26mt in FY28E, displacing a third of the e-auction offtake.

Outlook

All that said, we think the concerns are broadly in the price, whereas the medium-term demand growth outlook and project delivery catalysts are well-placed. We, therefore, reiterate our BUY rating, albeit at a reduced TP of Rs525.