Coal India pricing reasonable, still top pick post rally
Coal India (CIL) after the company's second-quarter results beat market expectations. The stock jumped 5.3% to hit a 52-week high of ₹350, emerging as one of the biggest gainers on Monday.
The average price target on Coal India of all analysts compiled by Bloomberg following the second quarter results is at ₹338.22, almost 3% lower than its closing price of ₹349.35 on Monday.
Brokerage Jefferies said that the company's earnings outlook has improved due to better volume growth and lower-than-expected cost trajectory.
It upgraded the EPS estimates to 18-42% for FY24-26.
«Coal India's volume growth trajectory has improved and is likely to sustain amid India's rising power demand, while the big impact of wage hike and e-auction price fall has already come,» said Jefferies in a note. The brokerage added that despite the 38% rally in the last three months, the stock is trading at a price to earnings of 6.4 times FY25 estimates — a reasonable valuation.
CIL remains Motilal Oswal's top pick in the mining sector due to strong performance, improved outlook on volumes on robust power sector demand, e-auction premiums, and lower costs.
