The company's second-quarter revenue from operations rose 21% year-on-year to Rs 44,179 crore, bolstered by stronger product sales. Nevertheless, brokerages lowered their price targets because operating earnings fell short of projections amid higher production costs and softening e-auction prices. Looking ahead, power plant inventory restocking from multi-year lows and elevated global thermal coal prices may provide near-term earnings support.
Key points
Brokerages reduced their valuation targets after elevated production costs caused operati…: Brokerages reduced their valuation targets after elevated production costs caused operating profits to miss estimates.
Expected inventory restocking by power plants from multi-year lows offers potential near-…: Expected inventory restocking by power plants from multi-year lows offers potential near-term support for earnings.
Long-term margin growth relies on expanding coal-washer capacity and diversifying into ir…: Long-term margin growth relies on expanding coal-washer capacity and diversifying into iron ore, renewables, and overseas critical minerals.
Sources checked by our analysis pipeline: 1
Revenue from operations rose 21% to Rs 44,179 crore from Rs 36,553 crore a year earlier, driven by higher revenue from product sales. Total income also increased 21% year-on-year to Rs 46,833 crore from Rs 38,694 crore.
Buy, sell or hold Coal India shares?
International brokerage Jefferies cut the Coal India target price to Rs 460 from Rs 500, implying an upside of 17% from current market levels. Coal inventories at power plants have declined to a multi-year low of just 6 days, well below the last 10-year average of 15 days.”Historically, periods of low inventory have typically been followed by strong dispatch growth for Coal over the subsequent six months as power generators replenish stocks,” the brokerage said in a note.With inventories currently well below normal levels, restocking demand provides a tailwind for COAL's volumes ahead. Jefferies factors in 8% YoY growth in Coal India’s dispatch volumes in FY27, followed by 5% CAGR over FY27-29E.
Jefferies expects Coal India’s earnings trajectory to improve, supported by a recovery in global thermal coal prices. International thermal coal prices, which remained range-bound…
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