Buy Coal India, target price Rs 480: Motilal Oswal Financial Services

Motilal Oswal Financial Services has a buy call on Coal India with a target price of Rs 480. The current market price of Coal India is Rs 366.85. Coal India, incorporated in 1973, is a Large Cap company with a market cap of Rs 225309.35 crore, operating in the Mining sector.

Coal India's key products/revenue segments include Other Operating Revenue and Coal for the year ending 31-Mar-2024.



Financials
For the quarter ended 30-09-2024, the company has reported a Consolidated Total Income of Rs 32177.92 crore, down -16.09% from last quarter Total Income of Rs 38349.21 crore and down -7.43% from last year same quarter Total Income of Rs 34760.30 crore. The company has reported net profit after tax of Rs 6137.66 crore in latest quarter.

The company?s top management includes Mr.P M Prasad, Mr.Nagaraju Maddirala, Mr.Punambhai Kalabhai Makwana, Mr.Ghanshyam Singh Rathore, Mr.B Rajesh Chandar, Prof.G Nageswara Rao, CA.Denesh Singh, CA.Kamesh Kant Acharya, Dr.Arun Kumar Oraon, Mr.Mukesh Agrawal, Mr.Mukesh Choudhary, Dr.B Veera Reddy, Mr.Vinay Ranjan, Mr.Debasish Nanda, Mrs.Nirupama Kotru. Company has Ray & Ray as its auditors. As on 31-12-2024, the company has a total of 616 crore shares outstanding.

Investment Rationale
Motilal Oswal Financial Services believes Coal India's production volume will clock a 6% CAGR over FY24-27, with dispatches under e-auction expected to account for ~15% of total volumes. This growth is primarily driven by the expectation that power demand in India will move in tandem with GDP growth, benefiting the company as a dominant coal supplier. The prospects for COAL remain strong, driven by healthy volume expectations, favorable e-auction premiums, and declining costs. Additionally, the recent stock correction offers an attractive valuation, with the stock trading at 3.3x on FY27E EV/EBITDA, below its 10-year historical average of 3.6x EV/EBITDA. The brokerage reiterates its BUY rating with a target price of Rs 480/share, valuing the stock at 4.5x FY27E EV/EBITDA. Coal India remains its top pick in the metals and mining sector.

Promoter/FII Holdings
Promoters held 63.13 per cent stake in the company as of 31-Dec-2024, while FIIs owned 8.58 per cent, DIIs 22.54 per cent.