At 4.90% Dividend & 114% Gains In 1-Yr, BUY Maharatna PSU Mining Stock For Target Of Rs 540

Maharatna PSU mining stock, Coal India is a hot pick of brokerage JM Financial due to the company's sustained production, stable prices and continuity in strength. CIL is the largest government-backed coal producer in the world, with a market value of more than Rs 3.08 lakh crore.

YTD, CIL share price has gained over 31% on BSE. But CIL is a multibagger with gains of nearly 114% in a year.

By end of market hours of July 11, CIL share price stood at Rs 500.20 apiece, up by nearly 2% on BSE. The stock is currently near its 52-week high of Rs 527.20 apiece, while it has more than doubled from its 52-week low of Rs 226.10 apiece.

The brokerage highlighted that sustained growth in production (83.91MT in May'24 vs. 76MT in May'23, +10% YoY) in response to surging energy/ peak power demand (12.5% YoY/13% YoY during 2MFY25) and commensurate increase in thermal power generation (+11.4% YoY Apr-May'24) is likely to enable Coal India (CIL) to achieve its production target of 838MT in FY25, +8.5% YoY.

It added, "Taking cues from global markets and domestic demand, e-auction prices remains rangebound, INR 2300-2600/t during Nov'23-Apr'24 vs. INR 3431/t in Apr'23. Given the continued momentum in production, stable e-auction prices, new initiatives (3GW Solar/ 2260MW thermal power capacity addition, venturing into coal-to-chemicals business) and improving long-term visibility ('King Coal' is coming back), we maintain our BUY rating on the stock with a revised TP of INR 540."