Coal India Stock: This Nifty Stock Nears All-Time Low As Q2 Network Disappoints


MUMBAI: Shares of state-owned Coal India fell nearly 3 percent on Thursday after the country’s largest coal producer posted a 16 percent drop in net profit for the September quarter, hurt by higher contract expenses than the expected.

As of 9:54 am, Coal India shares were down 3.02 percent to 122.10 rupees, while the benchmark Sensex was trading 0.51 percent lower at 43,371.52 points.

This Nifty stock has seen a huge erosion of value in recent years. While Coal India shares hit a record 447.1 rupees in August 2015, they are down 73 percent from those levels. In fact, the stock hit a record low of Rs 109.50 on October 15 this year.

It has erased 62 percent of investor wealth over the past decade, and it’s down 57 and 42 percent over the past 3 and 1 years, respectively.

Foreign institutional investors have been reducing their stake in the company for at least five quarters and currently hold a 7.19 percent stake in the company, compared to 8.96 percent at the end of the June quarter 2019.

After market hours on Wednesday, Coal India posted a 16.31 percent year-on-year drop in consolidated net profit to Rs 2,948.12 crore for the quarter.

Its consolidated income from operations increased 3.78 percent year-on-year to Rs 21,153.07 crore. On the other hand, the total expenditure of the company increased to Rs 18,177.82 crore from Rs 17,734.44 crore. Crude coal mining increased 9.41% year-on-year to 133.96 million tonnes, while production increased 10.56% year-on-year to 114.98 million tonnes. The board also approved an interim dividend of Rs 7.50 per share.

Jefferies has a hold rating on the stock with a target price of Rs 120. The brokerage noted that Coal India’s cash EBITDA fell a strong 20% ​​year-on-year and was a 23% loss mainly due to higher contractual and other expenses. rate, while equity worsened and accounts receivable rose 48% during the first half of the fiscal year, resulting in negative operating cash flow of Rs 3.6 billion.

Jefferies said its Rs 120 price target is based on 5.5 times the FY22E PE, which is lower than the long-term average of 12 times, but believes it is justified given multiple concerns such as ESG, long-term currency risk. term to renewable sources. and large contingent liabilities.

Motilal Oswal has a buy rating on the stock, with a price target of Rs 126. “The failure was largely led by higher-than-expected contractual expenses and provisioning of Rs 3.5 billion. However, the higher contractual expenses are an indication of higher OBR (elimination of overhead) activity, in our opinion, ”the analysts said in a note.

.