Coal India share price gains after Emkay Global initiates coverage with a ‘Buy’ call, sees 27% upside
₹440.85 apiece on the BSE, gaining as much as 2.20%. Emkay Global initiated coverage on Coal India shares with a ‘Buy’ rating and target price of ₹550 per share, implying an upside potential of more than 27% from Friday’s closing price.
The brokerage house believes India’s large population and expansive scale make it unfeasible to phase out the use of coal for the next decade at least, while the country’s current growth momentum makes the wait for energy transition difficult; hence, the use of coal should actually accelerate until renewables scale up. Also Read: Correction in midcap, smallcap stocks an entry opportunity; TVS, Zomato best picks among ‘fallen angels’: Emkay Global “A sustained coal demand tailwind coupled with the ‘high-growth, high-cash generation’ phase compels us to be buyers of the stock," said Amit Lahoti, Senior Research Analyst at Emkay Global Financial Services.
Coal India is embarking on a multi-year value-creation journey with volume growth, strong margins, and free cash generation and the brokerage firm believes the company will succeed with sustained high returns on invested capital along with volume growth until the end of this decade. “We expect the stock to re-rate on a multi-year view.
We believe the stock is transitioning from a dividend-yield story into a holistic value-creation one," Lahoti said in a note. Also Read: IndiGo share price hits 52-week high as UBS remains bullish, raises target price on stock Coal production is estimated at 1 billion tonnes (BT) in the medium term implying a 9.2% CAGR over FY23-27E.
The brokerage firm’s analysis suggests that mining equities tend to follow earnings momentum closely and the market does not tend to decouple from the trend for long. “Our
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