Most analysts retained their bullish investment recommendation for Coal India Ltd. as net profit of the world's largest miner of the fossil fuel beat estimates despite prolonged rains disrupting production.
Its operating profit, though fell, also beat estimates. That was mainly on account of cost cuts and higher prices.
Coal India's output, however, was hit due to torrential rains in some parts of the country where its mines are present. Overall production fell 13 percent to 103.99 million tonnes. As a result, coal supply, too, was 10.8 percent lower than last year.
The company's realisations were also higher. That's because of a 10 percent rise in fuel supply agreement realisation on higher supply to non-power consumers and grade control. E-auction realisation, which fell 22 percent, missed estimates. E-auction premium were the lowest in a year due to lower international coal prices.
Shares of Coal India rose as much as 2.9 percent to Rs 216 apiece, compared with a flat Nifty 50.
Here's what brokerages have to say about Coal India's second-quarter performance...
JP Morgan
- Remains ‘Overweight' and hikes target price to Rs 275 from Rs 255 a share.
- Increases EPS estimate by 11-13 percent.
- Coal India stocks price rallied over 11 percent in a month.
- Stock offers attractive dividend yield of 9 percent.
- Lower costs and higher prices offset weak production.
- Outperformance to continue due to attractive valuations, improvement in second half.
Edelweiss
- Maintains ‘Buy' with a target price of Rs 235 a share from Rs 227 earlier.
- Fuel supply agreement realisation is expected to sustain at current levels due to change in mix.
- Imminent pick up in volumes; raises FY20/21 EPS by 4 percent/3 percent.
Citi
- Maintains ‘Buy' rating with a target price of Rs 270 from Rs 250 a share.
- Risk-reward is favourable with attractive dividend yield.
- Raises FY21/22 profit after tax estimates on lower tax.
Goldman Sachs
- Sharp jump in FSA realisation lead to earnings beat.
- Expects volumes in near term to be impacted by adverse weather.
- Adverse weather in one of the key coal production regions in Odisha.
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