Coal India’s stocks were leading the charts for the last two sessions. The share price of Coal India rose 1% to the day’s high of Rs 386 on the National Stock Exchange. However, ICICI Securities slashed its target price by 3.3% to Rs 440 from Rs 450 while maintaining its ‘Buy’ rating.
But what made the brokerage house prune the target price? According to ICICI Securities, Coal India’s performance is likely to be impacted by the possibility of stagnant volumes.
The company’s share price has fallen over 20% in the previous one year. ICICI Securities said that Coal India’s production and offtake volumes until February 2025 were impacted by rake unavailability, inclement monsoons, and ongoing production issues at SECL. Following this, the brokerage house trimmed sales volume growth estimate to 1% from 3% for FY25 and 4% from 5% for FY26.
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However, firm Indonesian coal prices will help the company. “Indonesian coal (the most imported variety) prices have remained firm, following the government’s recent announcement on HBA pricing effective 1 Mar’25. As a result, we expect e-auction prices to remain stable at least for Q4 FY25,” said ICICI Securities.
ICICI Securities on Coal India: Muted operating performance
Further, Coal India’s operating performance remained muted in Q4 FY25 as well. “Contrary to our expectations of CIL’s operating performance having bottomed out in Dec’24, volume growth thus far in Q4FY25 has been subdued,” said ICICI Securities in a research note. There were a lot of reasons behind the subdued performance like a slow offtake, low production at mines, delays in getting statutory clearances, and high pit head inventory level.
Coal India’s performance in Q3
The company reported a net profit of Rs 8,491.2 crore, a drop of 17.5% year-on-year in the third quarter of FY25, compared to Rs 10,291.7 crore posted in the same quarter last year. The revenue from operations stood at Rs 35,779.8 crore for Q3 FY25, a slight decline of 1% YoY from Rs 36,154 crore recorded in Q3 FY24.
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In the previous five trading sessions,
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