Coal India share price gains 4% as production increases for third consecutive month

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Published: March 2, 2020 3:06 PM

Coal India Limited share price saw a 4 per cent jump on Monday after the company informed the market regulator that production for the month of February recorded a growth of 14.2 per cent on-year basis.

The off-take performance was robust as well, witnessing a 6.8 per cent growth from the same period last year.

Coal India Limited share price saw a 4 per cent jump on Monday after the company informed the market regulator that production for the month of February recorded a growth of 14.2 per cent on-year basis. The off-take performance was robust as well, witnessing a 6.8 per cent growth from the same period last year. This is the third consecutive month that Coal India has posted a positive production and off-take numbers. The stock was trading at a price of Rs 173.6 during the day.

In a filing, Coal India noted that production in Central Coalfields Limited, South Eastern coalfields, Mahanadi Coalfields, and Western Coalfields saw a double-digit growth as none of the coal fields registered a slump in production. Production was down at Bharat Coking Coal Limited in the previous month, however, the same saw a 3.2 per cent growth on-year basis in February. The highest off-take recorded was at Northern Coalfields at 14.7 per cent followed by  Mahanadi Coalfields at 11 per cent.

With a back-to-back increase in production and off-take, ICICI Securities has put a ‘Buy’ call on the stock with a target price of Rs 319. ICICI Securities expects off-take to improve further as power sector demand surges. “As power demand has witnessed a material improvement from January 2020 onwards (up 3.5%/7.3% YoY in Jan’20/Feb’20), despite the prolonged cold season in North India, we expect offtake to improve significantly in March,” said ICICI Securities.

What could put a break on Coal India, according to ICICI Securities is prolonged weakness in the power sector which would lead to lower volumes. Weak international prices and natural disasters are also among the factors that could hit Coal India.

Since its IPO opened in 2010, the scrip is down by 50 per cent, now trading at a price of Rs 172. The issue price for Coal India was kept at Rs 245 and the share closed at a price of Rs 342 on the day it was listed. 

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