Brokerage firm Jefferies has upgraded India’s largest mining company Coal India Ltd. to “buy” from its earlier rating of “hold.”
Jefferies has also raised its price target on Coal India to ₹385 apiece from ₹240 earlier. The revised price target implies a potential upside of 16% from Sunday’s closing levels. The stock closed at the highest level in six years on Sunday.
The brokerage said that Coal India’s 12% volume growth helped offset the impact of lower e-auction prices and higher staff costs.
Coal India reported a 9.2% FSA volume growth to 154.7 MT from 141.6 TM last year. Realisations also rose by 9.1% to ₹1,542 per tonne, which was higher than Nuvama’s estimate of ₹1,514 per tonne.
Jefferies believes that Coal India’s volume growth trajectory has improved and is likely to sustain amidst India’s rising power demand, while the big impact of wage hikes and a fall in e-auction prices has already come.
for the financial year 2024 in the first seven months.
Overall production figures for the first seven months of the current financial year stood at 394 MT, a growth of 11.9% from the 351.9 MT figure during the same period last year.
to the monsoon months.
Jefferies has upgraded Coal India’s financial year 2024-2026 Earnings Per Share (EPS) estimate by 18% to 42% and is now expecting a 5% Compounded Annual Growth Rate (CAGR) for its EPS over the financial year 2023-2026, despite a high base.
Coal India’s shares have rallied 8% over the last month and nearly 40% over the last three months. It was among the top Nifty 50 gainers in 2022 as well. Despite this, at 6.4 times the financial year 2025 price-to-earnings, the stock is trading at reasonable valuations, as per Jefferies.
17 out of the 23 analysts who track Coal India continue to have a “buy” recommendation on the stock. Nuvama has the highest price target on the street for Coal India of ₹404 per share. Jefferies’ target of ₹385 is the fourth highest on the Street.
