Kolkata Stocks：Coal India shares tumble nearly 6% after Q2 PAT falls 22% YoY. Should you invest？

Shares of the government-owned miner Coal India today fell by 5.6% to day’s low of Rs 435.20 on the BSE after reporting a 22% fall in its September quarter consolidated net profit for the quarter ended September 30, 2024 at Rs 6,289.

The same stood at Rs 8,049 crore in the year ago period.

The revenue from operations in Q2FY25 stood at Rs 30,673 crore which is lower by 6.4% over Rs 32,776 crore reported in the corresponding quarter of the previous financial year.Kolkata Stocks

The company has also announced an interim dividend for the financial year 2024-25 at Rs.15.75 per equity share and has fixed Tuesday, November 5, 2024 as the record date

Jefferies has maintained a buy rating on the stock and cut the target price to Rs 570 from Rs 600.

The Q2 results were weak but rising power consumption is likely to support volume growth. Big e-auction price fall seems behind. Jefferies has cut the FY25-27E EPS by 2-3% and sees the company’s valuation to be attractive.

Motilal Oswal maintained a buy rating on Coal India and revised the target price to Rs 560.

Q2 performance was weak as overall volumes were affected by monsoon and costs remained highHyderabad Investment. A lower proportion of e-auction volumes also affected profitabilityHyderabad Stocks. With a robust volume outlook, healthy e-auction premiums and lower operating costs, the long-term outlook for Coal India remains positive. The company is increasing its coal-washer capacity by setting up eight coking coal washeries, which will strengthen its position in domestic coking coal. Further, the company expects coal mine expansions to be funded via internal accruals and might borrow to undertake certain strategic diversification projects, such as RE facilities and coal gasification.

Also read: IDFC First Bank shares nosedive 10%, hit 52-week low as Q2 profit plummets 73%

JM Financial maintained its buy rating and a target price of Rs 601 on the stock.

Deviations from estimates are primarily due to restated 2QFY24 financials and a decline in average realisation of regulated FSA prices leading to a decline in revenue by Rs 1,600 crore and an increase in total opex by Rs 1,080 crore which led to a reduction in EBITDA by Rs 2,800 crore. Notwithstanding the current moderation in power demand, JM Financial remains bullish on demand momentum going forward which is leading India to refocus on thermal capacity additions.

Nuvama retained a hold rating on the stock while lowering the target price to Rs 517 from an earlier Rs 542.

The FY25E/26E EBITDA have been reduced by 6%/1% to factor in lower prices and volumes. Nuvama believes that the e-auction prices shall stay tepid and FSA coal prices shall not increase until FY27. Earnings growth is missing. Available at a 5% yield, Nuvama said that it does not see much upside potential and awaits volume growth for a re-entry.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

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