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India’s largest mining firm has had a subdued second half of 2024, with the state-run stock correcting over 30% from its peak.
Brokerage firm Emkay Global believes the recent correction has made valuations attractive. While the market has been hesitant toward the stock due to a lack of meaningful catalysts and a challenging macroeconomic backdrop, Emkay notes a recovery in key metrics—FSA prices, e-auction premia, e-auction volumes, production/offtake volumes, and employee costs—in Q3, following a dip in Q2.
Emkay retains its ‘Buy’ rating with an unchanged target price of ₹525 per share, citing expectations of continued recovery in subsequent quarters and attractive valuations at 6 times FY27 earnings.
Morgan Stanley also has an ‘Overweight’ rating on Coal India with a price target of ₹525 per share. It said that an EBITDA of ₹12,300 crore beat the estimate of ₹11,900 crore. Adjusted for overburden removal (OBR), EBITDA stood at ₹10,400 crore, in line with expectations, while adjusted EBITDA per ton was ₹537. Profit after tax (PAT) came in at ₹8,500 crore, 3% below estimates due to higher depreciation from impairment of stripping assets at NCL.
Coal India also announced an interim dividend of ₹5.6 per share, with a record date of January 31, 2025.
Motilal Oswal maintains a ‘Buy’ rating on Coal India, with a target price of ₹480 per share. It noted in-line performance in Q3, supported by higher e-auction premiums.
Adjusted EBITDA (excluding OBR costs) stood at ₹10,400 crore, down 13% year-on-year but up 45% quarter-on-quarter, matching estimates. EBITDA per ton was ₹536, down 14% year-on-year but up 26% quarter-on-quarter. PAT stood at ₹8,500 crore, slightly above the estimate of ₹8,400 crore, aided by higher-than-expected other income.
On the other hand, Nuvama Institutional Equities retains its ‘Hold’ rating with a reduced price target of ₹419. The brokerage says it doesn’t see much downside, but prefer to wait for volume growth to re-enter the stock.
“Lower e-auction price, adverse volume mix, tepid volume growth YoY amid weak power demand, increased competition and higher CoP led Coal India to report a decline in EBITDA,” it said.
Nuvama has trimmed its FY25 and FY26 EBITDA estimates by 3% and 5%, respectively, to factor in lower 3.5% volume CAGR over FY25–27E.
Out of the 25 analysts that have coverage on Coal India, 19 of them have a ‘Buy’ recommendation on the stock, while four have a ‘Hold’ rating. Two analysts have a ‘Sell’ recommendation on the PSU. Consensus is projecting a potential upside of 28% for the stock.
Shares of Coal India settled 2.36% lower on Monday at ₹374. The stock is down 30% from its recent peak of ₹543.55.
