Coal India: 5 Key reasons why analysts expect more than 15% gains for stock, that is pick of the week for SBI Securities
Stock Market Today: Coal India share price has risen more than 90% in a year. Analysts expect more than 15% further upside for the stock that is also pick of the week for SBI Securities. Here are 5 key reasons
Coal India share price has risen more than 90% in a year. As strong demand , rising production has improved earnings outlook and has led to to gains for Coal India share price , analysts expect more than 15% upside for Coal India share price.
Coal India remains pick of the week for SBI Securities where its target price of ₹507 indicates more than 15% upside for the Coal India share price trading at close to ₹441 levels.
Anand Rathi Research too has initiated coverage on Coal India with a target price of ₹520 indicating more than 15% upside for Coal India Share prices.
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5 Key reasons
- Strong Volume guidance- Coal India reported record 773.6 million tonne production in FY24 that grew 10% year-on-year. Its sales volume at record 753.5 mt also grew 8.5% on highest-ever deliveries to the power industry in FY24. Moving forward Coal India targets to achieve a production volume of 838 mt and 1,000 mt for FY25 and FY26 respectively.
- Output enhancement through mine development- For 15 projects in Phase I and 15 projects in Phase II, with a combined total targeted capacity of roughly 173 million tonnes per year (MT) and 91 MT, respectively, Coal India has developed a transformative plan to involve MDO, highlighted SBI Securities . Analysts at Anand Rathi research said that strong demand from powr sector under Fuel Supply Agreements and e-auction along with enhanced coal washeries will eventually help it cross 1billion tonnes production in the next 2-3 years.
- Improved connectivity- Under the "First Mile Connectivity" programs, Coal India is upgrading the mechanized coal transportation and loading system.. By FY29–30, the business will be able to boost mechanized evacuation from 151 MTPA (as of August 2019) to 988.5 MTPA thanks to these FMC projects, highlighted analysts at SBI Securities.
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4. Cost Control Measures- Coal india plans managing expenses by shutting down unprofitable mines and cutting workforce by about 5% per year for the next five to ten years, highlighted analysts at Anand Rathi. They forecast employee cost per tonne to decline to Rs595 in FY25 and to Rs590 in FY26 (vs the five-year Rs660 average).
5. Strong earnings outlook and dividend yield. Coal India is expected to report 23.8% rise in net profit in Q4FY24 as per Motilal Oswal Financial Services estimates. With its focus on volume ramp-up and cost savings, analysts at Anand Rathi factor in 13% Ebitda CAGRs (compound annual growth Rate) over FY24-26. The company has a prudent dividend policy and ahead a 50% payout is expected, they added.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions
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