Coal India stock rises on eight-fold rise in Q2 net profit; what brokerages say

The Coal India stock rose in trade today after the country's largest miner reported an over eight-fold rise in consolidated net profit to Rs 3,085 crore for the quarter to September 2018 compared to a net profit of Rs 370.4 crore in the corresponding quarter of previous fiscal.

The large cap stock rose up to 2.08% to 266.25 on the BSE.  The stock has lost 3.50% during the last one year but gained 1.31% since the beginning of this year.

22 of 28 brokerages rate the stock "buy" or 'outperform', five "hold" and one "underperform", according to analysts' recommendations tracked by Reuters. The Coal India stock is trading below its 50-day and 200-day moving average of 273.17 and 275.43, respectively.

Total income for the September quarter rose to Rs 24,209.3 crore, over Rs 19,171.7 crore in the corresponding period a year ago.

Consolidated expenses of the company during the September quarter rose to Rs 19,091.5 crore from Rs 18,143.7 crore a year ago.

Coal India's production for the July-September period stood at 119.6 million tonnes (MT), as against 113.04 MT in the corresponding quarter a year earlier.

CIL, which accounts for over 80 per cent of the domestic coal output, had earlier said that it is optimistic about an aspirational production target of 652 million tonnes for the fiscal year 2018-19.

On Monday, shares of the company closed at Rs 264.05 apiece on the BSE, down 1.55 per cent from their previous close.

Here's a look at what brokerages said about the stock.

CITI

The stock trades at ten times one -year forward price to earnings (on consensus), 1.5 SD below mean, offers 7% dividend yield. The brokerage has given a buy call with a target price of Rs 350 on

1) e-auction price support

2) realization upside from linkage auctions

3) strong volumes

4) limited cost pressures

Morgan Stanley

Coal India delivery on volume growth, cost progression, and share of e-auction volume is key to earnings growth. Valuation & dividend yield stand at 8% (F19e) could support the stock. It has a target price of Rs 306 for the stock.

Macquarie

Macquarie has maintained its outperform rating on the stock with a target price Rs 335.  The brokerage  sees upside risk to earnings, valuations suggest limited downside to the stock. There are upside risks to estimates whereas our FY19 earnings per shares estimate is 4% ahead of consensus dividend yield of 7% FY19e could have an upside risk.