Coal India - Plenty Of Steam Left: ICICI Securities

ICICI Securities Report

Despite the impressive run-up (~37% in the past three months), we believe that there is still room for a 25% upside for Coal India Ltd.’s stock price performance. Key points:

1. Production volume likely to be aided by South Eastern Coal Fields Ltd.

2. Demand from power sector likely to stay firm.

3. Record imports by China, amidst looming winter-heating season, likely to aid e-auction prices.

4. E-auction volumes and linkage materialisation to stay elevated, aiding profitability.

Taking cognisance of the recent uptick in international coal prices and robust six months-FY24 operating performance, we raise our multiple to eight times (from 7.2 times) corresponding to two deviations above its past five-year trading range.

Our revised target price works out to Rs 395 (earlier Rs 325). We retain 'Buy' on the stock.

Our view is also based on a sustainable dividend yield of 9% through to FY25E.

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