Coal India shares slip 2% as stock trades ex-dividend; what should investors do?

Shares of Coal India India Ltd are trading ex-dividend on Friday (August 18). The PSU firm announced a final dividend of Rs 4 per share during the Q4 and annual earnings announcement in May 2023. In the current session, Coal India stock fell 2.21% intraday to Rs 227.15 against the previous close of Rs 232.30 on BSE.

The stock opened lower at Rs 229.15 on BSE. Market cap of the firm slipped to Rs 1.40 lakh crore on BSE. The stock has risen 64.72% in two years and gained 66.76% in three years. Coal India stock hit a 52-week high of Rs 263.30 on November 9, 2022 and fell to a 52-week low of Rs 207.70 on March 27, 2023.

In terms of technicals, the relative strength index (RSI) of the Coal India stock stands at 50.2, signaling it's trading neither in the overbought nor in the oversold zone. Coal India shares have a beta of 0.6, indicating low volatility in a year.

The share has climbed 2.84% in a year. Total 2.37 lakh shares of the firm changed hands amounting to a turnover of Rs 5.40 crore on BSE.

 In a filing on May 7, the company said, “Further, the Board of Directors in its meeting held on date had recommended payment of Final Dividend for the financial year 2022-23 @ 4/- per share of the face value of Rs 10/- as recommended by the Audit Committee of CIL in its meeting held on date subject to approval of the Members at the ensuing Annual General Meeting (“AGM”) of the Company."

Net profit of Coal India slipped 10% to Rs 7941 crore in Q1 against  Rs 8834.22 crore profit in the corresponding period of previous fiscal.

The largest coal producer's revenue from operations rose 2% to Rs 35,983.2 crore compared to Rs 35,092.17 crore in the year-ago period.

Raw coal output rose 9 per cent to 175.4 million tonnes in Q1 from 159.9 million tonnes during the same period last year. The off-take of raw coal rose to 186.9 million tonnes during the quarter from 177.4 million tonnes during Q1FY23.

The earnings were announced on August 8.

Here’s a look at the outlook of the Coal India stock.

Vaishali Parekh, vice President for Technical Research at Prabhudas Lilladher said, "Coal India has been moving sideways, hovering near the important 50-EMA and significant 200-DMA level of Rs 228-230 zone. It would need a decisive breach of Rs 242 for a fresh breakout. At the same time, the Rs 225 level is seen as a good support and only a decisive breach below this would turn the overall bias negative. Till then, sideways movement is anticipated."

Axis Securities has assigned a target price of Rs 265 on the PSU stock post Q1 earnings.

"With robust  production,  coal  stock  at  CIL  stood  at  53MT.  Also,  the  coal  stock  at  coal-based  power plants stood at 33MT at the end of July 2023, providing adequate buffer, which could allow CIL to divert higher coal to the  NPS  (non-power  sector). We reduce our  EBITDA  estimates  for  FY24/25E  by  8%/3%  as  we reduce our  e-auction prices and increase our employee expenses, partially offset by higher overall sales volumes. We continueto value the stock at 4.0x 1-year forward EV/EBITDA multiple on FY25E Adj.EBITDA. We arrive at our target price of Rs 265/share(from Rs 275/share)," said the brokerage.

 On the other hand, Systematix Institutional Equities sees the stock falling to Rs 157 post Q1 earnings. It has maintained a sell call on the stock.

"The cost of production at Rs 1,327/t (+6%/-14% YoY/QoQ) was 6% below our estimate. We have cut our FY24E/FY25E EBITDA marginally by 1% to factor in 40% lower YoY e-auction premiums and a likely 6% upward revision in FSA prices. We value COAL at 4x  FY25E  EBITDA  to  arrive  at  a  revised  target  price  of  Rs  157 (Rs 159 earlier). Maintain SELL," said Systematix.

Also read: Hot stocks on August 18, 2023: Adani Power, Indian Bank, Adani Green Energy, PTC Industries and more

Also read: 140% return in 2023! Zensar Tech stock rally defies broader IT sector weakness