Coal India share price sees a smart uptick on the back of 11% EBITDA growth in Q4 driven by lower employee cost. This, is particularly striking after the 15% cut in share price seen over the last 1 year and the lacklustre H1 performance. Can the Q4 performance trigger a broader and more long-term rally? Many brokerages see a strong upside for the stock going forward, with Motilal Oswal setting a price target of Rs 480 per share, implying over 25% upside. However, investors must watch out for some areas of concern like muted volume growth
Coal India: What’s the brokerage view?
Brokerages have come out with their reports on Coal India. Here is a look at how they are charting out the stock’s journey going forward.
Motilal Oswal on Coal India: Price target implies 25% upside
Motilal Oswal has reiterated a Buy with a target price of Rs 480 per share. This, implies a nearly 25% upside from current levels. According to them, Coal India delivered a reasonable Q4 performance after a muted show in H1. “The e-auction premiums softened during FY25, which got offset by better e-auction volume,” they added. They believe that the company’s focus on increasing coal-washer capacity will improve its market share in domestic coking/non-coking coal segment.
The Motilal report also highlighted that the management focus on the expansion of coal mines, which would be funded via internal accruals is a key factor to watch out for. For FY26/FY27, they are largely maintaining estimates and “expect volumes to improve, which would boost earnings performance.” One of the key factors for this, as per the report, is the expectation that “e-auction premium may remain stable at 70% going ahead.”
Nuvama on Coal India
Nuvamaa has a hold rating on Coal India with a target price of Rs 405 per share. That implies limited room for upside from current levels. According to the brokerage house, “they prefer to wait for volume growth for an opportune stock entry.” The Coal prices and volumes have been flat in Q4 so far. The risk of the loss in market share is another key overhang for the stock.
The company’s ex-employee cost increased by 4% YoY to Rs 723/t. It was primarily due to higher contractual cost. Meanwhile the employee cost drifted down 11% YoY on lower average manpower and muted performance related cost. The costs due to perks/allowances also came down significantly.
Coal India dividend announcement
That said the company did not disappoint shareholders in terms of dividend payout. The company announced a final dividend of Rs 5.15 per share. The record date is yet to be announced, and the dividend payout is normally scheduled within 30 days of the stock going ex-dividend.