Coal India Hits 52-week High: Coal India Ltd’s (CIL) shares are burning bright on the bourses, having risen almost 53 per cent so far in 2022. State-owned coal mining corporate Coal India is currently trading at its 52-week high level of Rs 237 on the BSE. . Favourable demand-supply dynamics and growing global coal demand has augured well for the state-run coal producer.
The company fared well on production in August despite it being a seasonally weak month because of rains. Output rose 8.5 per cent year-on-year (y-o-y) to 46.2 million tonnes, but the rise in offtake or sales volumes was subdued at 5 per cent y-o-y because of the higher base of last year. Supplies to thermal power plants stood at 86 per cent of the total and increased by 16 per cent y-o-y. For FY23, CIL’s offtake target is 700 million tonnes, implying 3.6 per cent y-o-y growth for the rest of this fiscal.
The demand momentum in the power sector is expected to continue, driving a rise in offtake in the coming days. Motilal Oswal in a note last week said that it expects global coal demand to remain strong in the near term as the world recovers from the pandemic and Europe shifts to renewables (in the long term) from Russian gas, increasing dependency on coal in the near term.
E-auction realizations are also robust. CIL supplies coal through the fuel supply agreements (FSA) and the e-auction route. Coal sold through e-auction tracks prices of international coal, which have surged substantially in 2022 so far.
Coal India’s Q1 profit jumped 178.65 per cent to Rs 8,833 crore against Rs 3,170 crore in the year-ago quarter. The PSU’s total consolidated revenue from operations jumped 38.8 per cent to Rs 35,092 crore in the June quarter against Rs 25,282 in the corresponding quarter of the previous financial year. Coal India’s earnings per share improved to Rs 14.33 in Q1 against Rs 5.14 in the year-ago quarter.
What Should Investors Do Now?
Sharing as its medium-term tech pick, brokerage Prabhudas Lilladher said “the stock is in strong up trend making higher lows and higher highs. Recently it entered a correction. It fell down to channel support during the correction. The price behaviour is showing evidence that correction might have concluded and a larger up trend may resume. Buy for a target of Rs 255 with a stop loss of Rs 227."
Kush Ghodasara, Independent Market Expert, said: “Coal India is on a dream run because power prices are going to shoot up around the world due to gas shortage in Europe. So with the hike in gas prices, industries which use gas as a component to fire its machine would substitute for coal-based firing which will increase demand for coal. Therefore its expected coal India’s revenue would be rising. Technically with a stop loss of Rs 225, the stock has potential to reach Rs 285 in short term”
Ravi Singhal, CEO, GCL, said: “Coal India looks great at this price as winter is coming and the demand for energy can likewise increase in the European Union region. Specially, natural gas and other alternatives such as coal will be at the advantageous end. This can benefit the stock more. Our target is to reach Rs.300 till December," he said.
Ravi Singh, vice president and head of research-ShareIndia, “Coal India stock outlook is positive on back of favourable demand-supply dynamics and growing global coal demand. The company’s coal production last month has also increased despite rainy season. The surge in power demand augur well for the Coal India. The stock is also forming bullish pattern on daily and weekly chart. The volume rise will further support the trend."