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The stock of Coal India moved up 1.5 per cent or Rs 4.9 after CLSA in a note said the stock is now ‘a relatively safe haven.’
Trading volumes on the BSE also improved to 1.87 lakh shares against the two-week average of 1.57 lakh shares.
“We upgrade FY13-14 EPS by 6-9 per cent and upgrade Coal India from under-performer to outperformer with a target price of Rs 390,” said CLSA in a research note.
The report said Coal India has improved production substantially in the first quarter and “we see a high probability that FY-13 targets will be met.”
The contours of the new fuel supply agreements (FSAs) and the stand taken by CIL’s board on the same have reduced policy risk concerns in the near-term.
“Our analysis of the coal requirements for the new FSAs shows that the risk of large penalties is low over FY13-14 even if penalty rates are hiked. CIL offers much higher earnings visibility than its sector peers and we don’t rule out an expansion in multiples as it becomes a place to hide in a sector engulfed by macro risks,” CLSA added.
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