Coal India 2nd Interim Dividend On Jan-27; BUY Maharatna PSU Metal Stock With 6.79% Yield? Q3 Preview Here!

Coal India 2nd Interim Dividend On Jan-27; BUY Maharatna PSU Metal Stock With 6.79% Yield? Q3 Preview Here!

Coal India, Maharatna PSU giant engaged in the metals and mining sector, is going to be in focus on Monday, January 27, due to its Q3 results and second interim dividend announcement. Year-to-date, Coal India shares are down by nearly 1% and trading below Rs 390 levels. In the third quarter, Coal India is expected to report a de-growth in its operating profit due to weak e-auction realization. Also, recently, brokerage JM Financial downgraded its stance on the PSU giant.

Coal India Share Price:

Last week, on Friday, CIL’s share price stood at Rs 383.20 apiece, down by 0.7% on BSE with a market cap of Rs 2,36,155.75 crore. The heavyweight metal stock has corrected significantly from its 52-week high and is currently closer to its 52-week low.

At present, the stock’s 52-week high and low is at Rs 544.70 apiece and Rs 361.30 apiece. However, Coal India’s return on equity is strong at 91.47%.

Coal India Q3 Results Preview:

As per the regulatory filing, Coal India announced that its board of directors are scheduled to meet on Monday, the 27th of January’ 2025 inter-alia, to consider, approve and take on record Un-Audited Financial Results of the Company (Standalone & Consolidated) for the 3rd quarter ended 31st Dec’ 2024 after the results are reviewed by the Audit Committee of the Board.

In its Q3 results preview report, Antique Stock Broking said, “In 3QFY25, COAL produced 202 MT, up 2% YoY and offtake was 193 MT, up 1% YoY. Although e-auction premiums may be lower than in the base quarter, leading to a dip in profitability. We have modelled 8.2% of volume offtake as an E-auction sale in Q3FY25 and is kept the same as Q3FY24. The decline in Q3FY25 EBITDA is due to weak E-auction realization at INR2465/t vs INR3321/ YoY.”

Furthermore, brokerage Axis Securities highlighted that CIL’s Coal off-take grew by only 1.7% YoY, while it grew by 16% QoQ over a seasonally weak Q2FY25.

That being said, Axis Securities has modelled 53% e-auction premium (vs. 69% in Q2FY25 and 117% in Q3FY24) and 13% e-auction volumes (vs. 9%/8% in Q2FY25/Q3FY24). The brokerage expects consolidated revenue to grow by 0.5%/18% YoY/QoQ led by higher overall coal offtake partly offset by lower e-auction premiums.

“We expect Adj EBITDA (exclOBR) to de-grow by 5% YoY (up 59% QoQ on impacted Q2) led by lower realisation on account of weaker e-auction premiums, partially offset by higher offtake,” Axis Securities report said.

Coal India Interim Dividend:

On Monday, the company will also declare its second interim dividend for FY25. In its filing, the metal giant said, “Board of Directors of the company may also, inter alia, consider and declare payment of 2nd Interim Dividend for FY 2024-25, if any. The Company has fixed 27th January’2025 as the “Record Date” for the purpose of payment of 2nd Interim Dividend on Equity Shares for Financial Year 2024-25, if declared by the Board.”

The ex-date for Coal India’s interim dividend is set on January 31. Earlier, the company paid its first interim dividend of Rs 15.75 per share whose ex-date was in November last year. In the past 12 months, Coal India delivered dividends up to Rs 26 per share.

Since February 2011, Coal India has distributed about 29 dividends, as per Trendlyne data. Currently, its dividend yield is at 6.79%, which is among the highest dividend yields in PSU basket.

BUY Coal India Share?

As per Trendlyne data, the consensus recommendation from 26 analysts for Coal India Ltd. is BUY. However, EPS is expected to reduce by 7.6% in FY25. The average 1-year target price on Coal India is currently at Rs 498.68 apiece, which signalled at over 30% potential upside ahead.

Amidst Q3 results season, Coal India is among top picks in the metal sector by Antique Stock Broking. However, brokerage JM Financial has recently downgraded its stance on the company.

In its latest report, JM said, “After showing remarkable performance (production and dispatch, both grew 10%+ YoY during the last 2 years vs. historical average of 3-4%), Coal India has now set an aspiration to reach 1bn tonnes (BT) of production by FY27 (which we believe will now happen by FY30). Amidst these factors, the slow and steady change in production mix towards inferior and cheap coal, gradually reducing PLF of thermal power plants, rise of captive mining, moderating/ stable e-auction prices, unlikely success in substitution of imported coal and lack of any meaningful impact from new thermal power plants is likely to limit the company’s performance momentum in the next few years, resulting in EPS cut by 9-13% during FY25-27E from our earlier estimates. During FY24-30, we estimate Coal India to register revenue/ ex-OBR EBITDA/ PAT CAGR of 4%/ 1% /-1% vs. 8%/ 18%/ 25% during FY18-24. Hence, we downgrade the stock to HOLD with a revised DCF-based TP of INR 362 implying 3.7x EV/EBITDA FY27.”

About Coal India:

With a Maharatna status, Coal India Limited (CIL) the state owned coal mining corporate came into being in November 1975. With a modest production of 79 Million Tonnes (MTs) at the year of its inception CIL today is the single largest coal producer in the world and one of the largest corporate employer with manpower of 272445 (as on 1st April, 2020). CIL functions through its subsidiaries in 84 mining areas spread over eight (8) states of India.

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