Maharatna stock hikes coal prices after 5 years; Brokerage see an upside of 18%

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Maharatna stock hikes coal prices after 5 years; Brokerage see an upside of 18%
Credit: © Reuters.

With a market capitalization of Rs 148,675 crores, the stocks of Coal India Limited (NS: COAL ) closed in the red today at Rs 241.25, slipping around 1.25 percent as compared to the previous closing price of Rs 244.30. The stock has shown steady growth with an up movement of about 23 percent in the last one-year period ranging from Rs 196.05 to the current price levels.

One of the prime causes for the stock price to show down movements is after the company, through a regulatory filing with the BSE, informed about the company’s Board approving the price revision of High-grade (G2-G10) non-coking coal w.e.f. 31st May 2023. The last hike being in January 2018, this move has come after a period of more than 5 years.

The filing further mentioned that there has been an increase of 8 percent over the existing prices of high-grade coal. Moreover, the price hike will be applicable to all the subsidiaries of the company. Due to the price revision, the company will be earning an incremental revenue of around Rs 2,700 crores for the remaining period of FY23-24.

Coal India Limited is a state-owned coal mining company responsible for the vast majority of coal production in India. It is mainly engaged in the mining and production of coal and also operates coal washeries. The company operates across various mining areas that are spread over various provincial states of India.

During FY’23, the company reported operating revenues of Rs 1,38,252 crores and generated net profits of Rs 28,125 crores. The company has a dividend yield of 10 percent.

Having a positive outlook on the company, Motilal Oswal (NS: MOFS ) gave a ‘Buy’ tag to the stock with a target price of Rs 285 indicating an upside of 18 percent as compared to the current price levels.

The rationale behind providing such a recommendation is pertaining to the robust demand from domestic sources, higher volumes, etc.

According to the latest shareholding data available for the March 2023 quarter, Promoters of the company hold a 66.13 percent stake, and Foreign Institutional Investors (FIIs) hold a 7.84 percent stake in the company.

Written by Amit Madnani

The post Maharatna stock hikes coal prices after 5 years; Brokerage see an upside of 18% appeared first on Trade Brains.

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