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Business News/ Markets / Stock Markets/  Coal India shares soar 30% in 12 months; analyst still sees 260 target in sight
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Coal India shares soar 30% in 12 months; analyst still sees ₹260 target in sight

Shares of Coal India were trading 1.14 per cent higher at ₹226.20 apiece during Wednesday's trade

CIL stock has given a return of 30 per cent in the last 12 months.Premium
CIL stock has given a return of 30 per cent in the last 12 months.

State-owned Coal India Ltd (CIL) has reported healthy growth in volume for FY23 wherein it slightly bettered its production volume guidance of 700 million tonne (MT). Going forward, domestic brokerage ICICI Direct expects healthy traction in volumes to continue.

Hence, the brokerage has upgraded the stock from 'Hold' to 'Buy', with a target price of 260, 4.5 times FY24E EV/EBITDA, implying an upside potential of 17 per cent from the current market levels.

Shares of Coal India were trading 1.14 per cent higher at 226.20 apiece during Wednesday's trade. The stock has given a return of 30 per cent in the last 12 months (from 172 in April 2022 to 223 levels in April 2023).

Key triggers

Over FY22-24, the brokerage expect CIL’s consolidated topline to grow at a CAGR of 7.9 per cent while consolidated EBITDA and consolidated PAT are expected to register a CAGR of 13.5 per cent and 16.4 per cent, respectively.

ICICI Direct expects CIL to report consolidated EBITDA margins of 30.9 per cent for FY23E and 24.9 per cent for FY24E (EBITDA margin of 22.5 per cent for FY22).

Key updates -

  • Coal India reported production and offtake volume for March 2023 and for FY23. For March 2023, CIL reported production volume of 83.5 MT, up 4 per cent on-year, while offtake volume for March 2023 was at 64.2 MT, up 3.4 per cent YoY.
  • CIL has slightly bettered its FY23 production volume target of 700 MT. For FY23, CIL’s production volume was at 703.2 MT, up 12.9 per cent YoY while offtake volume for FY23 was at 694.7 MT, up 5 per cent YoY.
  • For FY24, CIL has given a production and offtake target of 780 MT. Of this, 610 MT is likely to meet the power sector’s demand. Hence, going forward, availability of coal for the non-regulated sector (which includes e-auction volumes) is likely to increase notably in FY24 when compared with FY23.
  • This augurs well for CIL’s e-auction volumes for FY24.

The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

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ABOUT THE AUTHOR
Meghna Sen
Business journalist tracking markets, companies, economy and crypto for Livemint. She has 6 years of experience with online and print publications. Email: meghnasen08@gmail.com
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Published: 12 Apr 2023, 01:05 PM IST
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