Moneycontrol BureauBrokerage firm Citi Research maintains a buy call on Coal India and has a target price of Rs 380. The coal mining company will be able to offset wage revisions from the ongoing linkage auctions and a price hike, says the report.
The government has called forth applications from state utilities for allotment of 16 coal blocks for commercial use. Eight blocks will be handed out to utilities within the state, while the remaining eight will be allotted to state utilities other than those in the host state. Allotments are expected to be made in August after the coal ministry vets the applications and decides on the winners.
The research report discounts a weak volume outlook for Coal India, reckoning that the UDAY scheme (a revival plan where states will take over 75 percent debt of the distribution companies) along with forward e-auctions, and rationalisation of high-grade prices should help tick up volumes.
Citi expects the company to buy back 2.6 percent of outstanding shares. “We expect the buyback percentage to be higher as CIL has cash on its standalone books.”
Morgan Stanley is underweight on the company and maintains a price target of Rs 245, saying it factors a 20 percent increase in linkage auction price in this current fiscal year. According to firm, the key event to watch out for is the linkage auction for captive power plants which ‘should see interest from industries like cement, aluminium, steel, amongst others.”
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