Brokerage firm JP Morgan has raised the target price on state-run coal miner Coal India Ltd. to Rs 290 per share, reflecting a potential upside of 24 percent over Tuesday’s close on the back of an expected price hike by the company.
JP Morgan has assigned an ‘Overweight’ recommendation on Coal India shares. The brokerage had suggested a target price of Rs 285 per share for the company earlier.
The brokerage, in a note, mentioned that a price hike under the fuel supply agreements (FSA) would help Coal India offset the impact of wage increases which have been finalised.
Coal India went for a price hike in January 2018 and is due for an increase in prices for its customers.
JP Morgan also expects stable-to-higher earnings should translate into strong dividends from the company.
It also stated that foreign shareholding has steadily moved higher from 6.5 percent in March 2021 to 7.8 percent in Mar 2023, highlighting the dialling down of environmental social and governance (ESG) concerns.
Coal India this month announced that it supplied a record 586.6 million tonnes (MT) of coal to power producers in the 2022-23 financial year.
With the onset of the summer season, the demand for coal could go up. Coal India is working towards increasing its production by stocking adequate coal during the April-June period of the new financial year.
The company appears confident to meet the aforementioned target in the ongoing financial year as it is increasing production and has an adequate coal stock of 69 MT at its pitheads.
Coal India last week also announced that its coking coal production rose by 17.2 percent to 54.6 MT in the fiscal year 2023 compared to 46.6 MT in the fiscal year 2022.
The Coal Ministry has asked CIL to elevate the output of this category of coal to 105 MTs by 2030 in a bid to reduce its imports and forex outgo.
Coal India shares are trading 1.10 percent lower at Rs 229.65.
