Coal India gains 4%, hits over 2-year high on hopes of strong earnings

Amid the spiraling power generation, CIL raised its supplies to thermal power stations by 14.2 per cent during the first half of April'22 compared to same period last April.

Shares of Coal India (CIL) hit an over two-year high of Rs 205.55, up 4 per cent on the BSE in Wednesday’s intra-day trade, surging as much as 10 per cent in the past three trading days on expectation of strong earnings.

The stock of state-owned mining company traded at its highest level since January 2020. In past three months, the stock has rallied 25 per cent, as compared to a 5.4 per cent decline in the S&P BSE Sensex.

Amid the spiraling power generation, CIL has raised its supplies to thermal power stations by 14.2 per cent during the first half of April 2022 compared to same period last April. The company had accelerated its production to 26.4 million tonne (MTs) during the first half of April 2022 registering 27 percent year-on-year growth. The company is headed for its highest April production ever. Output expansion in volume terms was 5.7 MTs, CIL said in a press release.

For Q4FY22, CIL reported coal offtake of 180 MTs, up 9 per cent YoY, 4 per cent QoQ. For the quarter, the brokerage firm ICICI Securities expects CIL's consolidated topline to increase 16 per cent YoY and 9 per cent QoQ to Rs 31,080 crore. Consolidated EBITDA margin is likely to come in at 27.5 per cent for Q4FY22 compared to 23.9 per cent in Q4FY21 and 24.0 per cent in Q3FY22. For Q3FY22, the brokerage expects CIL to clock an EBITDA/tonne of Rs 475/tonne compared to Rs 387/tonne in Q4FY21 and Rs 393/tonne in Q3FY22.

“We expect renewed buying in stocks like CIL that has been consolidating for a couple of weeks after a sharp up move was seen in commodity prices. The open interest in CIL has been declining gradually in the last couple of months. It has come down to the lowest in the current series since June 2021 while the stock has been trading with a positive bias,” analysts at ICICI Securities said in Quant Pick.

The brokerage firm believes short positions are out of the system and fresh longs are likely to be seen from here onwards, which should lead to a swift further up move in the stock towards Rs 230 level. The delivery Z-Score has again started to move into the positive territory since March 2022 as the stock is witnessing fresh accumulation in the delivery segment, the brokerage firm said March 28, 2022 report.