PSU stock with high dividend yield jumps 5% after multiple brokerages set targets on it

The Nifty50 PSU stock closed 5 percent higher at Rs 349 and reached its 52-week high of Rs 350 during the day. This came after it announced its Q2 results along with dividends and got upgrades from multiple brokers.

Fuelled by increased sales and improved joint venture profits, the net profit rose 12.7 percent year on year from Rs 6043.99 crores Q2FY23 to Rs 6813.5 crores Q2FY24, Also, the net revenue of the company rose 8 percent year on year from Rs 27538.59 crores in Q2FY23 to Rs 29978.01 crores in Q2FY24. 

The Coal India board announced an interim dividend of Rs 15.25 per share for FY 2023–2024, with November 21, 2023, as the Record Date for the aforesaid interim dividend. Interim dividend shall be paid to the eligible shareholders on or before December 09, 2023. 

Coal India is a large-cap company with a Market capitalization of Rs 2,15,172 crores. It also has a return on equity (ROE) of 56 percent and a return on capital employed (ROCE) of 70.5 percent. 

The company is almost debt-free, it has a debt-to-equity ratio of 0.07 and a Dividend yield of 7 percent. 

Promoters of Coal India own 63.23 percent of the company, with foreign institutional investors holding 7.80 percent, the general public owning 4.91 percent, and retail investors owning the remaining portion. 

The share of Coal India has risen by 47.18 percent in the last six months and 55.66 percent on a year-to-date basis. 

Jefferies increased the target price for Coal India to ₹385 per share and upgraded the stock from a “Hold” to a “Buy.” Additionally, the brokerage house raised its projections for earnings per share by 10 percent. 

In addition, Motilal Oswal Financial Services maintained its “Buy” rating on Coal India shares but increased the target price to ₹380 per share. The brokerage house increased its earnings-per-share estimates by 8.5 percent. 

“In line with the strong performance, improved outlook on volume, e-auction premiums, and lower costs, we have increased our EBITDA estimates by 16%/13% for FY24/FY25. Coal India remains our top pick in the mining sector,” Motilal Oswal said.

JM Financial reiterated its ‘BUY’ recommendation on the stock and raised its target price to ₹360 per share from ₹320 previously. Estimates for earnings per share were raised by 2.8 percent by the brokerage house. 

Written by Sriram KV

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