Maharatna Stock Coal India Share Price Rises 2% To Hit 52W High: Buy/Sell Or Hold?

Coal India share price extended 5 days winning streak today and hit a fresh 52-week-high at Rs 289 apiece during the afternoon deals after opening at Rs 284.25. After rallying 28.31% YTD, analysts of the broking company Sharekhan see a potential upside of 14.58% from the current market price of Rs 288. Coal India is on track to achieve FY24 coal production guidance, which has resulted in Sharekhan seeing a bullish trend on the Maharatna stock.

Coal India Fundamental Analysis

According to Sharekhan, "Coal India Limited (CIL) has levers to sustain its strong earnings growth momentum, given its focus on ramping up coal production to 780mt/850mt/1000mt in FY2024E/FY2025E/FY2026E, which implies a production CAGR of 12% over FY2023-FY2026E, improving volume mix with rising share of NPS (up 43% y-o-y in 5MFY24) and benefit of operating leverage. Robust FCF generation would mean sustained high dividend payout (average of 60% in the last five years)."

Coal India Share Price Target

"We have increased our FY2024-FY2025 earnings estimate to factor a higher coal offtake volume and better margin, given the rise in volume towards NPS (which fetches better realisation). Despite a sharp run-up of 26% in CIL's stock price, its valuation of 7.2x/6.4x FY2024E/FY2025E EPS is attractive and the stock offers a high dividend yield of 8-9%. The company's board has given in-principle approval to divest a 25% stake in Bharat Coking Coal Limited (BCCL) and a stake sale along with a potential listing could help unlock value. We maintain our Buy recommendation on CIL with a revised price target (PT) of Rs. 330 (valued at 7.5x its FY2025E EPS)," said the brokerage firm Sharekhan in a note.

Key Risks

"Lower-than-expected volume offtake amid any weakness in electricity demand and realisations (especially for e-auction) could affect margins and earnings outlook. The government's divestment plan could act as an overhang on the stock," said the research analysts of the brokerage firm.

Disclaimer

The recommendations made above are by market analysts and are not advised by either the author, nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.