Emkay Global Financial is optimistic about Coal India and has issued a “BUY” rating for the stock, with a target price of Rs 600 in a research report dated October 1, 2024.
In September, Coal India reported production of 51 million tonnes (mt), reflecting a 10.4% increase month-over-month but a slight decrease of 1% year-over-year. This brings the total production to 341 mt for the first half of fiscal year 2025 (1HFY25). Additionally, offtake volumes for September were recorded at 54 mt, resulting in a total of 363 mt for 1HFY25.
Coal India’s production is often seasonal, with the second quarter typically seeing lower volumes compared to the other quarters. Historically, production during the first half of the year accounts for about 41.4% of total output, while the second half accounts for 58.6%. Given the production of 341 mt in the first half, the adjusted estimate for full-year production is approximately 825 mt, which is slightly lower than Emkay’s estimate of 830 mt and the company’s guidance of 838 mt for FY25. However, Emkay believes there is still enough time and favorable seasonal conditions for Coal India to increase production in the second half of FY25. The fourth quarter is generally the strongest for the company’s performance.
Summary of Production Figures
In September, Coal India’s production stood at 50.9 mt, showing a month-over-month increase of 10.4% but a slight year-over-year decline of 1%. This totals 341.3 mt for the first half of the fiscal year, which is a 2.5% increase compared to the same period last year. Of the offtake volumes, 54.4 mt were reported for September, which reflects a 4.4% month-over-month increase and a 1.3% decrease year-over-year, culminating in 362.7 mt for 1HFY25, which is a 1.7% year-over-year increase.
Conclusion
In conclusion, Emkay Global Financial remains positive on Coal India, maintaining its “BUY” rating and target price of Rs 600 per share, based on the expectation that the company will successfully ramp up production in the latter half of the fiscal year.
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