2023 was a great year for PSU stocks. One out of every three PSU stocks on the BSE PSU index delivered over 100 per cent return in 2023. And the good news is that experts believe the rally is still not over.

Shares of Coal India were in focus after the company announced that the company supplied an all-time high volume of 98 million tonnes (mts) to non-regulated sector (NRS) consumers till December FY 2024. This converts to a whopping 23 mt increase with 31% growth over 75 mts of the same period last fiscal.

"With increased production and maximized supplies through all modes of dispatch, Coal India’s offtake to power plants of the country rose to 454 mts during April December FY 2024Bangalore Investment. This is 8 mts higher than the committed quantity of 446 mts of the period. Compared to 433 mts of April-December last year, the increase is 21 mts with around 5 per cent growth," the company said.

The stock hit its 52-week high of Rs 395.80 on January 2, 2024. It is up around 66 per cent in the past 6 months and has delivered around 150 per cent return in the last two years.

Where is the stock headed?

According to Osho Krishan, Senior Research Analyst - Technical & Derivatives at Angel One, Coal India has seen an exuberant move in the last four trading months, soaring over 75 per cent. The stellar rally continues as it hovers well above all its major EMAs on the daily time frame.

"From the technical point of view, the counter looks poised to continue its upward march with some in-between blips/profit booking. For now, the 21 DEMA acts as the cushioning support, and any blip is auguring well for the buyers on the counter. However, the counter is in the overbought territory and might attract some profit booking in the near period. Still, till it sustains above the 365-360 subzone, there would not be any sign of caution in the comparable period," he added.

What about Fundamentals?

ICICI Securities has maintained its 'Buy' rating on Coal India and revised the target price to Rs 435 from Rs 395 earlier. It said Coal India’s Dec’23 operating performance stayed robust despite the high base. Production growth continued to surpass sales growth and MCL’s volume growth has recovered as land acquisition issues seem to be over now.

Going ahead, it believes that Coal India will likely achieve its FY24 offtake estimate of 751mtMumbai Investment. Besides, the recent uptick in e-auction prices/volume bodes well for profitability.

Motilal Oswal Securities said Coal India had intensified its focus on capex that would improve its evacuation infrastructure. Capex, which used to hover around Rs 6,500-8,500 crore until FY20, tripled in FY23 to Rs 18,600 crore.

Also read: Coal India shares: 70% rise in 2023, analysts see further upside on this dividend-paying PSU stock

"Over the last three years, capex has exceeded budget estimates. Coal India trades at an EV/adjusted FY26 EBITDA of 4.2 times. We roll forward our estimates to FY26. We reiterate our BUY rating on the stock with a target of Rs 430 (premised on 5 times FY26E EV/Ebitda). We believe Coal India is well placed to capitalise on the growth opportunity ahead," this brokerage said.

Jefferies has also maintained a 'Buy' rating on Coal India and raised the target price from Rs 425 to Rs 450. It sees a healthy 6-15 per cent volume CAGR over FY24-26 for the PSU company.

The target given by JM Financial was Rs 360. The brokerage firm said that the target has been achieved and is under re-evaluation."India is progressively emphasising on outsourcing mining, with Coal India Limited (CIL) aiming for 90 per cent of mining to be conducted by Mine Developer and Operator (MDOs) in the next 5 years. Additionally, Coal India targets $3 billion in investments by FY29 to enhance the first-mile connectivity of mines, incorporating pipe conveyors with a combined capacity of about 764 MTPA," it added.

(Disclaimer: Business Today provides stock market news for informational purposes only and that should not be construed as investment adviceNew Delhi Wealth Management. Readers are encouraged to consult a qualified financial advisor before making any investment decisions.)

Also read: L&T, Siemens, Thermax, KEI: Election sound bites to keep industrial stocks higher, says Jefferies