Buy Coal India; target of Rs 290: Motilal Oswal

Motilal Oswal is bullish on Coal India recommended buy rating on the stock with a target price of Rs 290 in its research report dated May 31, 2023.

Broker Research

June 01, 2023 / 16:18 IST

Buy

26 Aug, 2025 12:21

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Motilal Oswal's research report on Coal India

COAL has approved a price revision for its high grade G2-G10 non-coking coal w.e.f. 31st May 2023. COAL has hiked prices by 8%, which is expected to realize an incremental revenue of INR27b in FY24. The last FSA price revision was taken in 2018 and COAL has now taken the first major price hike. This is expected to offset almost 50% of higher wage bill, following the mutual agreement between COAL and four central trade unions under NCWA-XI. The price hike affects ~30% of the volumes. The wage bill is expected to increase by ~INR60b in FY24, post the recent negotiations. This price hike would likely offset ~50% of the incremental wage bill. We have increased our revenue estimates by 2% to factor in the incremental revenues due to the price hike. The e-auction premiums have drastically come off in April and May and the near-term outlook on premiums remain soft.

Outlook

We have increased our EBITDA/APAT estimate by 2.4%/2.5% to factor in the price hike benefit, which would be partially offset by the lower e-auction premiums. COAL trades at EV/EBITDA of 3.9x FY24E. We reiterate our BUY rating on the stock with a revised target price of INR290 (5x EV/EBITDA). We believe COAL is well placed to capitalize on the growth opportunity ahead.

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