Coal India share price hits 52-week high as brokerages raise target price on strong Q2 results
- Jefferies upgraded Coal India to ‘Buy’ from ‘Hold’ and raised the target price to ₹385 per share. The brokerage house also increased earnings per share estimates by 18-42%.
Coal India share price extended rally to hit a fresh 52-week high on Monday after the company’s better-than-estimated earnings for the quarter ended September 2023 cheered analysts. Coal India shares gained as much as 4.76% to a high of ₹347.50 apiece on the BSE after certain brokerages raised target price on the stock.
The world’s largest coal miner, Coal India (CIL), reported a 9.85% increase in revenue and a 12.51% increase in net profit year-over-year during the second quarter of FY24.
Considering the huge demand from the power sector, Coal India has maintained its FY24 target dispatch to the power sector at 610 mt. The Ministry of Power has set FY24 electricity generation target at 1,750 bu (growth of 7.2% YoY) of which, the share of thermal power is expected to be over 75%.
This, analysts believe, augurs well for Coal India to achieve strong coal production in the next few years.
Global brokerage Jefferies upgraded Coal India to ‘Buy’ from ‘Hold’ and raised the target price to ₹385 per share. The brokerage house also increased earnings per share estimates by 18-42%.
Motilal Oswal Financial Services also raised the target price on Coal India shares to ₹380 per share, while retaining its ‘Buy’ rating.
“In line with the strong performance, improved outlook on volume, e-auction premiums, and lower costs, we have increased our EBITDA estimates by 16%/13% for FY24/FY25. Coal India remains our top pick in the mining sector,” Motilal Oswal said.
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JM Financial said India is clocking all-time high peak power demand growth and with increasing incidences of power shortages, the demand for coal continues to remain robust which is supported by growth momentum in production. It estimates CIL to report 781 MT, 859 MT and 936 MT of production during FY24, FY25 and FY26, respectively.
With consistent growth in production and consolidation in international coal prices, JM Financial reiterated its ‘BUY’ call on the stock and raised the target price to ₹360 per share from ₹320 earlier.
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Kotak Institutional Equities believes Coal India enjoyed higher auction realizations, with lower provisioning for employee costs through FY2023, both of which have rapidly reversed in FY2024.
It factors in e-auction realizations of ₹2,969/ton in FY2024 and ₹2,520/ton in FY2025. It maintained a ‘Reduce’ rating on the stock, and revised the target price to ₹275 per share from ₹240 earlier, primarily as it factors in higher volume growth for FY2024E.
At 12:10 pm, Coal India shares were trading 4.39% higher at ₹346.25 apiece on the BSE.
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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