Coal India’s share price dropped 3.22% to Rs 502.85 after brokerage Nuvama reduced the target price for the PSU stock by 4% to Rs 542 from Rs 567.
According to the brokerage, Coal India’s (CIL) stock price has risen by 14% in the previous six months due to consistent volume growth, which has even offset falling e-auction prices. “However, we observe weak volumes (even after adjusting for monsoons) in Aug-24, wherein CIL posted sales volumes of 52.1mt, down 12% YoY. Profits were further dented by a lower e-auction prices at INR2,336/t in Aug-24, down 11% MoM.”
The brokerage house, “We are cutting CIL’s volume by 1% YoY each in FY25/FY26 to 784mt/823mt to factor in weakness in volume until Aug-24. This along with muted prices compel us to reduce FY25E/26E EBITDA by 4%/4.5%; yielding a lower target price of INR542 (earlier INR567). We are recommending booking profits on each rise.”
