Neyveli Lignite can generate good returns: SBI Cap

Mahantesh Sabarad, Deputy Head of Research at SBI-Cap Securities told CNBC-TV18, "Neyveli Lignite Corporation is quite insulated from this coal allocation-deallocation kind of stocks. They had bid for one such block in the past but for their current operations fuel is not an issue for them at all. Lignite is available to them plentiful.”

“Government holds 90 percent and so from a perspective of divestment this seems to be a prime divestment kind of candidate as well. So if you look at its earnings trajectory, new capacities coming in, we think that it will have an earnings CAGR of somewhere around 21 percent over the next two years and hence from a purely valuation perspective, with fuel not being an overhang this is one company which can generate good returns,” he added.

Disclosure: Analyst and his firm doesn't hold the above stock.