Coal India Shares Slump 4% Higher In Q4 FY19

Shares of Coal India slumped 4% higher to ₹263.30 on Friday, supported by its strong performance during this year’s  March quarter. The company reported a 3.6 times and 1.48 times rise in profit on Tursday after tax for the quarter and year ended March 31, 2019, respectively, on the back of improved realisation from coal sales, lesser outgo on account of employee benefit and improved operational cost control.

The world’s largest coal producer’s total income crossed Rs 1 lakh crore for the first time since its inception 44 years ago. Total income for the year was Rs 1,05,420 crore against Rs 91,625 crore in the previous corresponding period. Gross sales for the year was Rs 1,40,603 crores while net sales was Rs 92,896.08 crore for the year.

The numbers were lauded by the Street, with brokerages showing faith in the stock.

CLSA has maintained a buy recommendation on Coal India and hiked the target price to Rs 290 from Rs 275. However, the brokerage highlighted that the company’s earnings outlook looks muted and it sees a flattish earnings per share (EPS) over FY19-21.

Citi also retained its buy recommendation on the stock and raised the target price to Rs 320 from Rs 300, underscoring that the company offers an attractive dividend yield. The financial firm said it values Coal India at a premium given its resource base and limited exposure to the global volatility.

Motilal Oswal Securities has also maintained a buy recommendation on the stock with a target price of Rs 307.

“We raise our adjusted PAT estimate by nearly 1 per cent to Rs 18,010 crore for FY20 and 4 per cent to Rs 19,200 crore for FY21, given higher FSA realization and lower CoP. The stock trades attractively at nearly 4 times FY20E EV/adjusted Ebitda (against a historical average of 7 times), P/E of nearly 8 times (against average of nearly 14 times) and offers a dividend yield of nearly 7-8 per cent. We value the stock on 5 times FY20E EV/Ebitda at Rs 307,” said the brokerage.

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