coal india dividend

coal india dividend

In the current global economic landscape, Coal India Ltd (CIL), India’s largest mining company, is poised to offer several advantages in the second half of the financial year 2023-24 (H2FY24), including e-auction price benefits, volume growth, and the potential for an all-time high dividend, according to a note from Nuvama Institutional Equities.

coal india dividend
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Nuvama Institutional Equities has raised its target price for CIL shares from Rs 361 to Rs 389, indicating a substantial upside potential of 35.44% compared to the current market levels. Despite a 0.21% decline, Coal India’s stock settled at Rs 287.20 per share on the NSE on Monday. It’s worth noting that CIL shares have experienced a 28% increase year-to-date and a 25% gain over the past year.

coal india dividend

Despite the stock’s impressive 25% rally since September 2023, Nuvama expects additional upside potential of 35% within a year, excluding expected dividends of Rs 30 in H2FY24E and Rs 25 in FY25E.

coal india dividend

The brokerage has updated its EBITDA estimates, raising FY24 by 9% and FY25 by 8% to incorporate higher e-auction prices and volume growth. “This, combined with a 4.5 times FY25/FY26 average valuation, results in an increased fair value of Rs 389 (formerly Rs 361), excluding dividends per share (DPS) of Rs 30/25 in FY24/FY25,” as stated by Nuvama.

coal india dividend

Nuvama has revised its DPS projections, increasing them from Rs 20 to Rs 30 for FY24 and Rs 25 for FY25. The firm suggests that the FY24 DPS of Rs 30 might be interim and is expected to be paid out in H2FY24, potentially offering an annualized dividend yield of 21%.

Nuvama pointed out that this is quite possible in a pre-election year, as CIL is likely to generate substantial free cash flow of Rs 22,000 crore in FY24E and Rs 19,500 crore in FY25E.

During FY18–22, Coal India reported an average EBITDA of Rs 25,100 crore, whereas it is anticipated to reach Rs 40,880 crore in FY24E. Nuvama believes that with higher volumes, a partial FSA price increase (on 30% of the volume), and cost stabilization, CIL will continue to generate EBITDA significantly above the average in the foreseeable future.

Furthermore, Coal India is among the top 10 dividend-paying companies, leading with an impressive dividend yield of 8.2%. In FY22, Coal India’s DPS was Rs 17, and it increased to Rs 24.3 in FY23, according to the findings from domestic brokerage firm Religare Broking.

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