Shares of Coal India has been attracting a lot of attention these days. The stock has seen a decent upside in recent times.
1) Close Work With States
Ministry of Coal (MoC) is working closely with state governments to facilitate availability of land, clearance and evacuation infrastructure; the efforts are bearing fruit-as reflected by the physical possession of 2,000 hectares of land by Coal India and clearance to 40+ projects over the past 12 months.
2) Rail Evacuation Project To Provide Good Benefits
On the evacuation infrastructure front, land acquisition scenario has improved in the past one year (for instance, land availability for Tori-Shivpuri section has increased from nil to over ~50% now). MoC remains confident of completing Jharsuguda-Barpalli line by June-2016, and Tori-Shivpuri and BhupdeopurBaround lines by CY17-end.
2) Commercial Mining Policy
Commercial mining policy framework: MoC is also working on creating a parallel framework for commercial mining and 72mines (from schedule I) with total capacity of 269mtpa (fully-explored reserves of 13.46 billion ton) have been identified for the purpose. FICCI has prepared an approach paper and held a workshop on June 23 to present and discuss the framework.
Motilal Oswal expects adjusted EBIDTA to double over FY15-20E, while higher FCF and dividend yield will provide comfort.
"We expect earnings CAGR of 14% over FY15-20E. Reiterate Buy with a DCFbased TP of INR448/sh. The stock trades at P/E of 14.0x and EV/EBITDA of 7.6x on FY17E basis," the research firm has said in its report.
Courtesy: Motilal Oswal Research Report On Coal India