Buy Coal India, target price Rs 234: ICICI Securities

ICICI Securities has buy call on Coal India with a target price of Rs 234. The current market price of Coal India Ltd. is Rs 145.65. Time period given by analyst is one year when Coal India price can reach defined target.

Coal India Ltd., incorporated in the year 1973, is a Large Cap company (having a market cap of Rs 90314.78 Crore) operating in Mining sector.

Financials
For the quarter ended 31-03-2021, the company reported a Consolidated Total Income of Rs 27974.12 Crore, up 14.96 % from last quarter Total Income of Rs 24334.62 Crore and down -5.11 % from last year same quarter Total Income of Rs 29481.41 Crore. Company reported net profit after tax of Rs 4591.81 Crore in latest quarter.


Investment Rationale
The brokerage maintains BUY rating and DCF-based target price of Rs234, but reduces offtake volume estimates for FY22E/FY23E by 5mnte each to 625mnte/655mnte, respectively, as it expects volumes to be impacted due to flood-like situation in Eastern India. The stock is currently trading at 5.6x P/E and 2.4x EV/EBITDA on FY23E basis with 39.7% RoE. The brokerage expects dividend payout to be high leading to ~14% dividend yield at current prices as incremental capex in diversified segments is expected to be funded by debt primarily.

Promoter/FII Holdings
Promoters held 66.1 per cent stake in the company as of June 30, 2021, while FIIs held 6.6 per cent, DIIs 21.5 per cent and public and others 5.8 per cent.