Buy Coal India; target of Rs 448: Motilal Oswal

Brokerage house Motilal Oswal is bullish on Coal India and has recommended buy rating on the stock with a target price of Rs 448, in its research report dated June 25, 2015.

June 26, 2015 / 15:00 IST

26 Aug, 2025 12:21

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Motilal Oswal's report on Coal India

Ministry of Coal (MoC) is working closely with state governments to facilitate availability of land, clearance and evacuation infrastructure; the efforts are bearing fruit-as reflected by the physical possession of 2,000 hectares of land by Coal India and clearance to 40+ projects over the past 12 months.

On the evacuation infrastructure front, land acquisition scenario has improved in the past one year (for instance, land availability for Tori-Shivpuri section has increased from nil to over ~50% now). MoC remains confident of completing Jharsuguda-Barpalli line by June-2016, and Tori-Shivpuri and Bhupdeopur-Baround lines by CY17-end.

MoC is also working on creating a parallel framework for commercial mining and 72mines (from schedule I) with total capacity of 269mtpa (fully-explored reserves of 13.46 billion ton) have been identified for the purpose. FICCI has prepared an approach paper and held a workshop on June 23 to present and discuss the framework.

"We expect Coal India to register a CAGR of 10% in volume over FY15-20E (v/s 2% during FY10-15). Accelerated volume growth and natural attrition will result in productivity gains and operating leverage. We expect adjusted EBIDTA to double over FY15-20E, while higher FCF and dividend yield will provide comfort. We expect earnings CAGR of 14% over FY15-20E. Reiterate Buy with a DCF-based TP of INR448/sh. The stock trades at P/E of 14.0x and EV/EBITDA of 7.6x on FY17E basis", says Motilal Oswal research report.