Coal India (NSE Cash) - BUY
293 - 288
Since last nine months, the stock has been
consolidating in a falling channel.
The prices have shown breakout from the
channel with higher volumes, thus
indicating start of an uptrend in the stock.
The prices, which were trading within the
‘Bollinger Bands’ in last nine months, have
given breakout from the upper band.
The ‘RSI Smoothed’ oscillator is also
showing positive crossover from its
average on daily and weekly charts.
Considering the positive placement of
‘SuperTrend’ and ‘PSAR’ indicators, we
expect this stock to give a decent up move
in the medium term.
Thus, it can be bought from current level to
a decline up to
288 for a target of
in coming three months. A stop loss can
be placed at
Source: Falcon ( Chart time: 10:00 IST )
May 30, 2016
Strong production growth to drive revenues: Coal India’s (CIL) production has
increased at a CAGR of ~8% over the last two years, as against a CAGR growth
of 1.8% between FY2010-14. Off-take growth has also picked up to 9% yoy in
FY2016 as against a CAGR growth of 3.2% in FY2010-14. With India still being
a net importer of coal, we believe CIL’s production and off-take would continue
to increase at similar rates over the coming years. CIL has already finalised plans
to achieve targeted production of 925MT by FY2020 and is planning to increase
production to 1bn tonne. We believe the production growth target is a bit too
52 week high/low
optimistic and expect CIL’s production to grow at a CAGR of ~8%.
Asset quality: CIL’s net realisation is significantly lower than the landed price of
Avg. Daily Volume
imported coal, despite the low prevailing global prices, providing enough
cushion to pass on any cost escalations. The increasing share of washed coal will
Face Value (
also help improve realizations. Further, technological and infrastructural
enhancements, coupled with operating efficiencies from rising production will
help to keep production costs low.
Shareholding Pattern (%)
Outlook: Coal India is a strong play on the domestic power demand with the
current Government taking proactive measures to resolve issues within this space.
The stock is currently trading at ~6x FY2018E EV/EBITDA. With a strong dividend
yield of ~7%, the current valuation looks attractive.
MF / Banks / Indian Fls
OPM PAT EPS ROE P/E P/ABV EV/EBITDA EV/Sales
FII / NRIs / OCBs
Indian Public / Others
May 30, 2016
Research Team Tel: 022 - 3935 7800
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April 18, 2016