The shares of the leading coal mining company gained up to 22 percent after ICICI Direct, a well-known brokerage recommended a ‘buy’ rating.
With a market capitalization of Rs 2.76 lakh crore, the shares of Coal India Ltd were trading at Rs 448.90 per share, increasing around 0.74 percent as compared to the previous closing price of Rs 445.60 apiece.
Looking into Coal India’s performance, revenue increased by 18 percent from Rs 35,169 crore in Q3 FY23 to Rs 36,154 crore in Q3 FY24. During the same period, net profit increased by 17 percent, from Rs 7,719 crore to Rs 9,094 crore.
ICICI direct , one of the well-known brokerages in India, gave a ‘Buy’ call on the auto stock with a target price of Rs 550 apiece, indicating a potential upside of 22 percent from Thursday’s price of Rs 448.90 per share.
Here is the rational behind the bullish potential upside target:
● As per the brokerage, coal continues to play a crucial role in India’s energy sector, constituting about 50% of the total energy consumption and approximately 70% of electricity generation. This underscores its importance as the primary energy source for the country’s growing energy needs.
● Despite efforts to shift towards renewable energy sources, there is anticipated growth in coal-based thermal capacity to meet increasing energy demands. This is expected to drive the demand for coal, positioning Coal India as a significant beneficiary, especially with immediate opportunities in catering to the country’s coal import requirements.
● Coal India Limited (CIL) achieved record production volumes in FY24, primarily fueled by robust demand from the power sector. With the government’s emphasis on ensuring 24×7 power supply nationwide by 2025, CIL aims to increase its production volume to 1000 MT by FY26E to meet the growing demand.
● CIL’s strategy for achieving double-digit volume growth includes improving evacuation infrastructure through First Mile Connectivity projects, engaging with Mine Developer Operators (MDOs) to enhance targeted capacity, and revitalizing Underground Mines by identifying and reactivating discontinued mines with substantial reserves. These initiatives are pivotal in driving the forecasted production growth.
Coal India Ltd’s primary business is coal mining and production, as well as the operation of coal washeries. The company’s key customers are the electricity and steel sectors. Other sector consumers include cement, fertilizers, brick kilns, and so on.
Written by :- Abhishek Singh
Disclaimer
The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Dailyraven Technologies or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.
