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Corporate tax cut to boost Coal India's earnings, but overhangs remain

While lower tax rate and attractive valuations are positives, concerns on volumes, lower e-auction realisations and divestment could weigh on the stock

Coal India likely to auction 30 million tonnes of coal in Jan-Mar quarter
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Ujjval Jauhari
Even as the reduction in corporation tax rates provides a big respite to Coal India (CIL), the stock is yet to see a surge. The coal producer may see a 7 per cent rise in earnings following the reduced tax rates. However, its share price —trading at around Rs 193 prior to the tax cut announcement —  now stands at Rs 199-levels.
 
After the tax cuts, analysts at Kotak Institutional Equities reduced their effective tax rate for CIL to 30 per cent from 35 per cent. This led to a 7 per cent upward revision in earnings forecast. However,

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First Published: Sep 27 2019 | 6:42 PM IST

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