Coal India shares fall 4% in 2 days on August volume dip. What brokerages say
Coal India (CIL) fell by 4% to a low of Rs 500.70 on the BSE on Wednesday after the company posted sales volumes of 52.1mt on Monday, down 12% YoY. Domestic brokerages like Nuvama and JM Financial are still optimistic about the stock because a few dips do not change the future.
CIL reported sales volumes of 52.1mt in August 2024, down 12% YoY, owing to a weak power demand amid heavy rainfall. However, volumes clocked a decline of 5.7% YoY during Jul-Aug '24 negating the impact of only monsoon for the decrease, implying that CIL’s volume was under pressure owing to weak demand.
This was further supplemented by rising coal production from captive mines and high imports holding up. Its total sales volume from Apr-Aug '24 was 308mt, up 1% YoY.
What brokerages say:
JM Financial
JM Financial maintained its buy rating on Coal India with a target price of Rs 601.
Global coal prices have corrected significantly, driven by oversupply in China, leading to the consolidation of Indonesian coal (5,900 GAR) prices around $ 92-96/t, and Coal India’s e-auction prices, too, remain range-bound at Rs 2,300-2,500/t.
“With a doable production target of 838 MT for FY25 (and a more ambitious MoU target of 908 MT), our confidence in Coal India's long-term growth remains strong, supported by favourable macros, including record power demand, a renewed focus on thermal capacity addition, and strategic initiatives like MDO,” said JM Financial in its report.
The Government of India has set a production target of 838 MT for Coal India in
