Coal India share price has been on a roll of late. The stock rose over half a per cent to hit its fresh 52-week high of ₹319.55 on Thursday, October 18. It has jumped about 41 per cent in the calendar year so far, strongly outperforming the equity benchmark Sensex which has gained 9 per cent in the same period.
Coal India share price hit its 52-week low of ₹207.70 on March 27 this year. In about seven months, the stock has surged 54 per cent.
After market hours on Monday, Coal India announced that its supplies to thermal power plants of the country shot up close to 6 per cent to 23.5 million tonnes (mt) during the first fortnight of October 2023 ahead of the festive season. Comparatively, the supplies were 22.2 MTs in the same period of October 2022.
The strong power demand is leading to higher demand from the power sector. Coal India’s first half FY24 production at 333 MT already had risen 11.3 per cent year-on-year while total supplies at 360.7 mt during the first half, were up 8.6 per cent YoY growth. The analysts say Coal India’s growth is commendable looking at the high base.
Also Read: Coal India share price scales 52-week high on improved volumes and blended realization outlook
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Mint talked to several analysts to understand the fundamental and technical aspects of the stock. Here’s what they said:
Fundamental views
Manish Chowdhury, Head of Research, StoxBox
We remain positive on Coal India as it is slowly getting out of the typical PSU tag, with production at record levels and consistently exceeding its own targets.
With rising energy demand and fossil fuel still at the cornerstone of our energy needs, we believe that Coal India being a domestic pure play would be at an advantage going forward.
Moreover, higher volumes from the non-power sector which has better realization, transparent price discovery through the e-auction process, a higher focus on operational efficiency, expected hike in FSA coal realization and prudent cost control initiatives are some structural positives that are likely to benefit the company in the long run.
We expect the company to generate robust free cash flows, thereby aiding to have higher dividend payouts in the long term.
Technical views
Gaurav Bissa, VP, InCred Equities
Coal India has been in a consistent formation of higher highs and higher lows on the weekly charts.
The stock recently witnessed a swing high breakout around ₹250 which pushed the price toward ₹280-290 levels. This was followed by a small consolidation which led to the formation of a bullish flag breakout.
The stock confirmed a bullish flag breakout on the weekly charts which has resulted in a strong upside.
The stock can test ₹335-340 in the current run. Traders are advised to hold the stock to higher levels, however, fresh buying is not advised at the current levels.
A weekly close above ₹350 can push the stock towards ₹400 levels where investors are advised to book profits.
Jigar S. Patel, Senior Manager of Equity Research at Anand Rathi Share and Stock Brokers
Coal India has given a stellar return of 44 per cent in just two months’ time. At the current juncture, maintaining a cautious approach would be the need of the hour due to the following reasons.
The current price is way above the Ichimoku cloud, which is a matter of concern.
The level of ₹318 will be stiff resistance since it is the 1.618 extension point of the 2015 August high of ₹227.
The monthly ADX line is way above both DMIs, which might call for some booking at the counter.
Santosh Meena, Head of Research, Swastika Investmart
Coal India is currently experiencing a robust bullish momentum in its market performance.
However, caution is advised when considering entry at the present levels due to the presence of a supply zone between ₹310 and ₹330.
It’s essential to avoid chasing the stock during this vertical move.
Taking a long-term perspective, the overall market structure remains bullish, suggesting potential for future growth.
A strategic approach would be to await a possible correction in the range of ₹275 to ₹260, which could present an opportune buying window.
Monitoring the stock and waiting for a favourable entry point within this zone is advisable for investors seeking a prudent investment strategy aligned with long-term gains.
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Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.
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