Four brokerages cut targets or flagged weak operating performance after Coal India's Q1 profit rose just 0.7%. Cost inflation and muted volumes cap near-term upside.
Coal India shares fell more than 3% on Tuesday after Q1 results disappointed analysts on operating performance, costs and realisations. The stock traded at ₹414.65 on the NSE by late morning.
The state-run miner reported consolidated net profit of ₹8,849.81 crore for the March quarter, up just 0.7% from a year earlier. Total income rose about 8% while total expenditure climbed roughly 12%, squeezing margins.
Jefferies kept a buy rating and a ₹500 target price, arguing that a recovery in power demand – possibly amplified by a weak monsoon – should lift Coal India's volumes in FY27. After a 12% EPS decline over FY24-26, the brokerage sees earnings improving at a 6% CAGR through FY29.
Citi held a neutral rating but trimmed its target to ₹430 from ₹440. Volume trends remain sluggish, the bank said, and upside to e-auction prices looks limited given the inventory build.
JPMorgan also stayed neutral, cutting its target to ₹430 from ₹435. Adjusted EBITDA for the June quarter came in below estimates, the bank noted, and it sees downside risks for international coal prices. Inventory is running slightly above last year's levels, and a potential wage revision in FY27 adds cost headwinds, JPMorgan said.
Morgan Stanley kept an equal-weight rating and a ₹420 target. Weak operating numbers drove the call: both FSA and e-auction realisations were softer than expected, while opex ran high. The brokerage cut its EBITDA estimates and said that while the stock looks inexpensive, it lacks a near-term catalyst for re-rating.
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