Even during the downturn in the market, the stock of the government company Coal India is holding firm. Brokerage house Motilal Oswal is bullish on the stock due to strong financials in the December quarter.
Coal India Stock Price: Talking about the year 2021, the stock market has been in correction mode. During this, the Sensex and Nifty companies were under pressure due to deteriorating global sentiments. But in this fall, the stock of Coal India, a government company in the coal sector, is holding firm. The company’s stock has gained more than 3 percent in the last 1 month and close to 20 percent in 6 months. Brokerage house Motilal Oswal is bullish on the stock due to strong financials in the December quarter. The brokerage says that the demand will increase at the international level in the coming days. On the other hand, the way there is a shortage of coal in the global market, Coal India can benefit from it. The company is in a comfortable position to meet the growing demand.
Why is Coal India in a strong position?
Brokerage house Motilal Oswal says that the demand for coal is expected to increase globally in the coming few years. Demand will be better due to the boom in the economy, due to which the prices will also increase at the international level. Leading coal companies will get the benefit of which. Talking about India, there is still more dependence on coal as the primary source of energy. Despite the development of ultra-large, efficient and economical storage devices, factories that rely on electricity continuously will continue to rely on thermal power for at least the next decade, until the new technology proves to be a reliable alternative to coal. Coal is in a comfortable position to meet the growing demand of India. The brokerage says that the stock is at an attractive price amid a strong outlook, so it is advisable to invest in it.
How much return can I get
The brokerage house has advised to invest in Coal India and the target has been kept at Rs 217. In terms of current price of Rs 163 it can give 33 percent return. The brokerage says that during 3QFY22, there was a strong rebound in the margins of the company. However, it has been weaker than expected due to higher RM cost and contractual expense. costs but expect profits to be even better in 4QFY22. The brokerage house has improved its adjusted EBITDA by 4%/15% for FY22E/FY23E. The brokerage says that due to the current coal shortage in the global market, the company can prove to be a beneficiary.
(Disclaimer: Stock investment advice is given by the brokerage house. These are not the personal views of The Financial Express. Markets are risky, so take expert opinion before investing.)
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