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Coal India shares hit all-time low; ICICI Securities maintains buy call

Brokerage firm ICICI Securities has a buy call on the stock with a target price of Rs 258.

Shares of Coal India (CIL) fell over 2 percent to hit their all-time low of Rs 118.85 in intraday trade on BSE on September 22.

As per analysts' views, the company may witness de-growth in production during the current fiscal as its output is likely to fall below 600 million tonnes amid subdued demand.

Analysts of brokerage firm Motilal Oswal projected production of 582 million tonne for Coal India and off-take of 565 million tonnes in FY21.

Brokerage firm ICICI Securities has a buy call on the stock with a target price of Rs 258.

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"We maintain our buy rating and target price of Rs 258 valuing CIL on a DCF basis with peak production of 850mnte from FY29E onwards. Although our volume estimate for FY21E remains at 580mnte, CIL is confident of exceeding it, which we are positive upon if the Sep’20 performance continues till Nov’20," said ICICI Securities.

ICICI Securities highlighted that CIL continues to be the lowest-cost coal producer globally, and with several measures being taken to further rationalise cost and infrastructure development, cost per ton is expected to further decline.

CIL targets to reach 1btpa production by FY24, which translates into a CAGR of 13.5 percent from FY20 (602mnte). The company is investing in several infrastructure projects to improve evacuation and mechanise production in order to reach this target, ICICI Securities said.

Shares of Coal India traded 1.44 percent lower at Rs 119.95 on BSE at 12:05 hours.

Disclaimer: The views and investment tips expressed by investment experts on SD Solutions are their own and not that of the website or its management. SD Solutions advises users to check with certified experts before taking any investment decisions.

Source - Moneycontrol.com

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