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This Nifty Stock Is Down 32% In 3-Years, While Sensex Is Up 65%, Should You Buy?
There are some stocks that have given negative returns to investors in the last few years. It is extremely painstaking to see markets rally and an investior stock fall. Having said that it is always difficult to be an outperformer all of the time.
How Coal India has been a laggard?
Coal India stock performance in last 3 years
Jan 9, 2019
| Jan 8, 2022
| Fall per cent | |
|---|---|---|---|
| Coal India share price | Rs 232 | Rs 157 | -32.00% |
Sensex performance in last 3 years
Jan 9, 2019
| Jan 8, 2022
| Fall per cent
| |
|---|---|---|---|
| Sensex closing | 36212 | 59744.65 | 65.00% |
Clearly, while the Sensex has rallied nearly 65% during the last 3-years, the Coal india stock has fallen almost -32%. However, we have to factor in dividends that the company has been declaring over the last 3-years. If we even factor the same, the returns from the stock would still remain negative.
Should you buy Coal India stock?
Over the last few months, when there was a coal shortage the stock rose sharply above Rs 200 and has fallen since. The company shares are bought by investors only for its dividend. Beyond that nobody is worried about the fundamentals and so so.
The company has a virtual monopoly with the only risk being labour related issues. The business is robust and with India being a coal guzzler and even importing coal business risks are virtually zero. Having said that we expect the stock to continue to move in a narrow band. If the stock cannot rally in a time when global commodities prices are on an upswing, what will happen when global commodity prices start dropping.
Conclusion
Forget the fundamentals, buy the stock if you want a decent dividend yields every year. Expect dividend yields of 7 per cent or thereabouts in the future. Even when the markets rally, it is frustrating to see the stock of Coal India languishing.
Disclaimer
Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies and the author are not liable for any losses caused as a result of decisions based on the article.
