Coal India (CIL) held its ground firm in yesterday’s weak trading session with a 1% rise on above average volumes. We like Coal India due to its strong balance sheet, huge reserves & strong fundamentals.
Also, positive initiatives from Ministry to address fuel issues are expected to bring faster developments on policy front.
We believe that going forward the stock performance will be driven by fresh catalysts such as ramp-up in mining clearances, improved volumes, price hikes and improved logistics.
We expect Coal India’s RoE & RoCE to remain higher on the back of higher realization, margins and optimum utilization of assets.
We have valued Coal India at 11x P/E FY17E earnings to arrive at Target Price of Rs.432 and recommend a BUY.
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