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Motilal Oswal Report
Domestic brokerage firm Motilal Oswal has retained its 'Buy' rating on Coal India Ltd. with a target price of Rs 510, implying an upside potential of around 19% from current levels.
The brokerage highlighted that Coal India's earnings were a miss due to cost pressures arising from the geopolitical situation, and the brokerge believes that these cost headwinds will stabilise in the coming quarters.
Motilal Oswal expects Coal India to deliver a revenue CAGR of about 4% and an Ebitda CAGR of 9% over FY26-FY28. At the current market price, the stock trades at around 4.9 times FY28 estimated EV/Ebitda, which the brokerage considers attractive. It has therefore reiterated its Buy rating and maintained its Rs 510 target price.
The company's focus on increasing coal-washer capacity will improve its market share in domestic coking/non-coking coal. Further, management continues to focus on expanding its coal mining operations, which will be funded through internal accruals.
At current market price, the stock is trading at 4.9x on FY28E EV/Ebitda. The brokerage retains its estimates and reiterate Buy rating with a target price of Rs 510, valuing the stock at 6x FY28E EV/Ebitda.
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