Domestic brokerage and research firm Motilal Oswal Financial Services expects robust domestic demand, the enhanced vision of one billion tonne production, and an improved e-auction premium to drive a strong near-term performance for the Coal India stock.
"Coal is trading at 3.6 times our FY24E EV/EBITDA and 1.8 times our FY24E P/B, respectively. We maintain our e-auction premium estimate for FY23 at 231 percent," said the brokerage while reiterating its 'Buy' rating on Coal India shares with a target price of Rs.275.
With a 32 percent upside potential, state-owned CIL continues to be the brokerage's top pick in the mining sector.
Motilal Oswal believes CIL is well placed to capitalise on the growth opportunity ahead. Any hike in FSA will further add to the financial performance of the company, it said.
CIL Looking To Hire Fresh Talent
CIL over the last two to three years has gradually reduced its hiring in the above 50 age group (zero hiring in the executive role above 50 years in FY22) and is focusing on hiring and retaining younger generations with fresh talents. “This will help Coal India bring down the wage bill considerably in the next few years," the brokerage said.
Also, almost 50 percent of the workforce is over 50 years and is due for retirement in the next few years and the younger workforce replacing the outgoing employees will be commanding lower annual packages.
CIL Q4 Performance
The brokerage also expects CIL to register a better QoQ performance in the fourth quarter with higher volumes on e-auction and almost similar levels of premium.
Coal India sells 10 percent of its volumes in e-auction at auction-determined prices and the brokerage expects the company to clock a total volume of 60 Million Tonnes in FY23E.
COAL has declared a second interim dividend of Rs.5.25 per share, thereby, taking the total dividend for FY23 to Rs. 20.25. "We have estimated full-year FY23 DPS of Rs. 27," the note stated.
Coal India stock has witnessed a 4 percent decline in the last month. Shares of the state-run miner were trading at Rs. 207.85, down 0.29 percent on NSE in Monday's trade.
Source: Mint News