Coal India’s stock price is showing potential for an upside as brokerage firms remain positive about its prospects. Despite underperforming the equity benchmark Sensex in the past year, Coal India’s stock has seen a 7% increase while the Sensex has gained 12%. On November 9, 2022, the stock hit its 52-week high of ₹263.30 on the BSE.
During the quarter ending June 2023, Coal India reported a 10% year-on-year decline in net profit, which stood at ₹7,941 crore, down from ₹8,834 crore in the corresponding quarter last year. However, the net sales of the company grew marginally to ₹33,072.6 crore during the same quarter.
Brokerage firms are optimistic about Coal India’s prospects in the medium to long term. Nuvama Wealth Management maintained a buy call on the stock with a target price of ₹361, suggesting a 57% upside. The firm expects a volume uptick of 7% and 4% year-on-year in FY24 and FY25, respectively, which would aid operating leverage. They also anticipate an increase in thermal power generation, leading to a rise in demand for Coal India’s supply and firming up e-auction prices.
Motilal Oswal Financial Services also maintained a buy call on the stock with a target price of ₹300, implying a 30% upside potential. They believe that the world’s growing dependence on fossil fuels, including coal, in the near term will benefit Coal India. China alone has commissioned numerous thermal power plants in recent months, and the commitment to providing 24×7 power supply in India further supports strong coal production in the coming years.
JM Financial upgraded Coal India to a ‘buy’ from a ‘hold’ while maintaining a target price of ₹255, indicating an 11% upside. They noted a correction in the stock’s value in recent months but highlighted improvements in production and better-than-expected e-auction prices. The government’s measures to ensure uninterrupted power supply, such as increasing domestic coal production and improving infrastructure, bode well for Coal India’s higher production and offtake.
In conclusion, Coal India’s stock price is showing upside potential, and brokerage firms believe in its long-term prospects. Factors like increased thermal power generation, stabilization of e-auction prices, and government initiatives support their positive outlook. Investors may consider these factors in their decision-making process regarding Coal India’s stock.
