Nomura has cut the target price of Coal India by more than 18% to a target price of Rs 260 as against the previous target of Rs 320, as the Japanese financial services major sees the pricing in non-coking coal prices as a key downside risk. Shares of Coal India were trading at Rs 260, up by more than 1% on Tuesday afternoon.
The global research firm observed that the earnings risk is quantified, while coal price revision is imperative. Further, Nomura has also cut FY18-19 EPS by 16%/10%, while it saw normalised EPS at 2-3% below mean consensus. Shares of the Kolkata-based player have shed more than 14% in the year so far. In comparison, BSE Sensex is up by more than 18% in the year.
According to news reports, Mahanadi Coalfields, a subsidiary of Coal India could face a penalty of more than Rs 20,000 crore in the wake of a Supreme Court order that rendered all mineral production in violation of environmental laws illegal. The Odisha government is evaluating the company’s liability after the top court in its August 2 verdict ordered the state to recover the value of all minerals produced without or in excess of caps under environment, forest laws, pollution control rules and mining plans.
Gopal Singh, CMD, Coal India Ltd told CNBC-TV18 that September had been a very good month for the company. “Demand from coal-based power plants has gone up,” Gopal Singh said. Earlier this month, the company said that it expects to generate additional annual revenue to the tune of Rs. 527 crore, on the back of a revision in sizing and rapid loading silo charges as well as additional charges for supply of slack and steam coal.
“Coal India Ltd in its 346th board meeting held on August 31, 2017, approved the revision in sizing charges, rapid loading silo (RLS) charges, revision in additional charges for supply of slack and steam coal,” Coal India Ltd said earlier this month in a regulatory filing.