Buy Coal India, target Rs 340: Prabhudas Lilladher

Prabhudas Lilladher has a buy call on Coal India Ltd. with a target price of Rs 340. The current market price of Coal India Ltd. is Rs 289.2 Time period given by the brokerage is a year when Coal India Ltd. price can reach defined target. Coal India Ltd., incorporated in 1973, is a largecap company with a market cap of Rs 177159.46 crore.

Investment rationale by Prabhudas Lilladher

We attended analyst meet of Coal India (COAL). The key highlights of the meet were i) 9% growth in FY19e offtake at 630mn (PLe:620mn) tonnes ii) Confident to realise the benefit of increased FSA prices in FY19e iii) grade slippage bottomed‐out as reflected in lower provisions iv) E‐auction volumes would remain on upward trajectory in FY19 (sold 106mn t in FY18,+12.7%). Driven by strong outlook on volume growth, full flow of FSA price hike and strength in E‐auction prices, we expect EBITDA to grow at CAGR of 18% in FY18‐FY20e. We reiterate BUY with TP of Rs340, EV/EBITDA of 6.5x FY20E.