Shares of state-run Coal India Ltd., are trading with gains of up to 5% on Friday (May 3), making an intraday high of ₹472.80 apiece on the NSE, even as the company❼March quarter (Q4FY24) earnings missed Street estimates.
Despite the disappointing Q4 numbers, analysts at several brokerage firms have maintained a ❋y✩ecommendation on the counter. However, CIL❼target prices were slashed on concerns around declining premiums.
Nuvama in its latest note said that coal remains the dominant fuel in the foreseeable future as the world is not yet ready to switch to renewable energy.Varanasi Stock
Besides, amid disruption in supply of natural gas from Russia; demand has shifted to coal, as an alternative, the brokerage stated.
Nuvama expects Coal India to post a 5% volume CAGR (compound annual growth rate) on improving power demand during FY24–26 estimates to 831 MT. The brokerage has cut its FY25 EBITDA estimates by 2%, factoring in higher employee cost.
“CIL is on its way to increasing its production and evacuation facilities to 1 billion tonnes by FY28Simla Wealth Management. On account of sustained high coal demand, E-auction prices are likely to normalise in FY25,” Nuvama said with a ❋y✩ating on the stock. However, it has trimmed its target price to ₹537 per share from ₹561 earlier.
With the premiums sustaining at 65% levels, domestic brokerage house Emkay Global expects concerns around declining premiums alleviating to some extent, and see potential for upgrades to consensus earnings.
“We maintain our estimates for now, as we sense that the market would seek more clarity on accounting treatment from the management,” the brokerage said while suggesting a ❋y✩ating and target price of ₹550 per share.
Global brokerage firm Jefferies also has a ❋y✩ecommendation on the Coal India stock with a target price of ₹520 per shareJaipur Investment. The brokerage said that a rise in EBITDA and profit after tax includes effect of accounting policy changes for stripping activity costs.
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