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Business News/ Markets / Stock Markets/  Coal India share price up 48% this year so far; is it still a buy? Here's what experts say
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Coal India share price up 48% this year so far; is it still a buy? Here's what experts say

Coal India share price has surged significantly in 2023 and experts anticipate further gains, with brokerage firms maintaining buy calls on the stock.

Coal India share price has jumped 48.4 per cent this year. (Agencies)Premium
Coal India share price has jumped 48.4 per cent this year. (Agencies)

Coal India share price has surged significantly in the calendar year 2023 yet experts and brokerage firms anticipate further double-digit gains, indicating that the stock's momentum is expected to continue.

As of the November 21 close, Coal India share price has jumped 48.4 per cent this year, strongly outperforming the equity benchmark Sensex which has gained just 8.4 per cent in the same period.

Coal India share price hit its 52-week high of 359.80 last week on November 15. It plumbed its 52-week low of 207.70 on March 27 this year.

Coal India on November 22 announced it held an investors’ meet on November 21 following which many brokerage firms maintained their buy calls on the stock, expecting a healthy upside potential.

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Brokerages remain positive on Coal India stock

Brokerage firm ICICI Securities has maintained a buy call on the stock with a target price of 395, implying an 18 per cent upside potential.

"We attended Coal India’s analyst meet on Nov 21 to discuss its Q2FY24 earnings and outlook. Key points (1) Production/offtake target for FY24/FY25 stands at 780mt/850mt, (2) e-auction volume in H2FY24 maybe 15 per cent of production volume, (3) the capex target for FY24 stands at 16500 crore, (4) output enhancement through the MDO route is being contemplated, (5) investment of 24,750 crore has been envisaged for FMC projects, and (6) evacuation capability is being enhanced by developing railway infrastructure, in line with production plans," ICICI Securities said.

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ICICI Securities believes rising e-auction premium (currently at 90 per cent) and focus on volume growth bode well for Coal India, however, it said investments in diversification projects and their capital returns have to be closely tracked.

Brokerage firm Motilal Oswal Financial Services also maintained a buy call on the stock with a target price of 380, expecting a 14 per cent upside in the stock.

"Coal India trades at EV/EBITDA of 4.3 times FY25E. We reiterate our buy rating on the stock with a target price of 380 (five times EV/EBITDA). We believe Coal India is well placed to capitalize on the growth opportunity ahead. Any hike in FSA (Fuel Supply Agreement) prices post-election will further add to the financial performance of the company," said Motilal Oswal.

Also Read: IT Sector earnings review: Axis lists top hits and misses in Q2; picks 3 top stocks

Brokerage firm Nuvama Wealth Management, too, maintained a buy call on the stock with a target price of 404, implying a 21 per cent upside potential. The brokerage firm said it remains positive on Coal India’s earning growth on the back of improved volume, higher e-auction premium and lower cost. Furthermore, Coal India intends to pay free cash flow post-capex as a dividend.

Nuvama believes the improved e-auction premium would be 118 per cent for October 2023 compared to an average of 80 per cent in Q2FY24 with higher volumes to drive earnings in the second half of FY24.

Also Read: Small and mid-caps see 44% rise in net profits helped by OPM expansions due to lower commodity prices- Jefferies

Read all market-related news here

Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.

 

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Published: 22 Nov 2023, 12:05 PM IST
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