Coal India Shares Hit Life High After Analysts Hike Target Price
Analysts expect lower costs to support growth in near term.
Shares of Coal India Ltd. scaled fresh high on Thursday after brokerages raised their target price on the stock, as they expect lower costs to support growth in near term.
The company's Ebitda stood at Rs 14,338 crore in the first quarter of fiscal 2025, against Motilal Oswal Financial Services Ltd.'s estimate of Rs 9,800 crore. The beat is due to lower than estimated operating cost, due to over burden removal policy, and lower employee costs.
The brokerage maintained a 'buy' rating on the company and raised the target price on the stock to Rs 600 per share, from Rs 550 apiece. The current target price implied a 15% upside from Wednesday's closing price.
Coal India's board has approved the alteration of the accounting policy on stripping activity early this year. The stripping activity provisions created till March 2022 are being carried forward, and the same is reversed and added to the profit and loss account in a systematic manner, Citi Research explained in a note on Wednesday. So far, Rs 5,600 crore have been credited, leaving a balance of Rs 60,300 crore to be adjusted over the years.
Citi Research maintained a 'neutral' rating on the stock and hiked the target price to Rs 540 from Rs 460. The present target price implies 3.45% upside from the Wednesday's closing price.
The brokerage has also hiked earning per share estimates for fiscals 2025, 2026, by 2%, 1%, respectively due to lower costs.
Motilal Oswal has raised net profit estimates by 11% and 3%, respectively for FY25 and FY26 because of OBR reversal, it said in a note on Thursday.
The volume outlook for the coal supplier remained positive given it caters to 90% of the need of India's power sector. Coal India also signed a fuel supply agreement to meet the growing need of power sector. It intends to increase capacity to 838 million tonne in fiscal 2025, Motilal Oswal Financial Services said.
The company has showed good cost control in first quarter, and earnings are holding up despite moderation in e-auction premiums, Emkay Global Research said in a note on Wednesday. The brokerage has penned down 8% volume CAGR estimates for next three-four years.
Emkay Global kept 'buy' on Coal India Ltd. and increased the target price to Rs 600, from Rs 550. The target price indicates 14.90% upside from Wednesday's closing price.
The brokerage has increased Ebitda and EPS estimates by 15% and 14% respectively, for the current financial year.
Coal India Q1 FY25 Result Key Highlights (Consolidated, YoY)
Revenue up 1.33% at Rs 36,464 crore versus Rs 35,983 crore (Bloomberg estimate: Rs 36,021 crore).
Ebitda up 5.62% at Rs 14,338 crore versus Rs 13,575 crore (Bloomberg estimate: Rs 10,172 crore).
Ebitda margin up 159 bps at 39.32% versus 37.72% (Bloomberg estimate: 28.2%).
Net profit up 4.2% at Rs 10,943.5 crore versus Rs 13,385 crore (Bloomberg estimate: Rs 7,653 crore).
.png?auto=format%2Ccompress)
Shares of Coal India Ltd. rose as much as 3.39%, the highest level since its listing on Nov. 4, 2010. They pared gains to trade 2.46% higher at Rs 534.90 per share at 10:31 a.m., compared to a 0.30% advance in the NSE Nifty 50.
The stock has gained 122.34% in 12 months, and 41.99% year-to-date. Total traded volume so far in the day stood at 1.56 times its 30-day average. The relative strength index was at 70.99, which implied the stock was overbought.
Out of 26 analysts tracking the company, 20 maintain a 'buy' rating, three recommend a 'hold' and three suggest 'sell', according to Bloomberg data. The average 12-month analysts' consensus price target implies a downside of 1.4%.
