Analysts' corner

Coal India & Reliance Industries

COAL INDIA
Reco price: Rs 395
Target price: Rs 424
Coal India's FY12 sales volume is likely to be better than the estimated 465 million tonnes (mt), due to inventory liquidation and increased rake availability. Overburden removal charges may continue for a part of FY12, but are expected to be discontinued in FY13. Analysts are considering overburden removal charges of Rs 1650 crore (earlier nil) for FY12, and discontinuation of it from FY13. Edelweiss has marginally tweaked its estimates, with a revised fair value of Rs 424 per share (earlier Rs 418 per share). Maintain hold.

—Edelweiss Securities

RELIANCE INDUSTRIES
Reco price: Rs 757
Target price: Rs 909
The risk of the US recession is rising. It will hit petrochemical and refining margins of Reliance Industries (RIL). RIL's bear-case fair value implies 19 per cent potential downside. Analysts expect 20 per cent potential upside in RIL from current levels. Risk-reward, thus, is evenly poised. The key is whether the probability of a US recession, which analysts now estimate at 40 per cent, rises. Bear-case FY12-13 estimated EPS are 17-32 per cent lower than the base-case and would mean no growth. Buy.

—Bank of America Merrill Lynch