Coal India share price gains 8% in last 1 month; is it a stock to buy?

Coal India share price has been witnessing decent traction in the last one month on attractive valuation and healthy growth prospects. On Monday, March 17, Coal India share price rose over 2 per cent in intraday trade on the NSE. The stock opened at ₹380.20 against its previous close of ₹378.30 and rose 2.3 per cent to the level of ₹387.05. It, however, pared gains, trading 1.31 per cent higher at ₹ 383.25 around 12:50 PM.

Coal India share price trend

In the last one month, Coal India shares have gained over 8 per cent against an over 2 per cent drop in benchmark index Nifty 50.

The PSU stock hit a 52-week low of ₹349.25 on February 17 this year and a 52-week high of ₹543.55 on August 26 last year.

Is Coal India a stock to buy?

Experts appear positive about the stock for the long term as the believe value is emerging in the stock while its valuation is attractive.

Brokerage firm Motilal Oswal Financial Services has a buy call on the stock with a target price of ₹480. This implies a 27 per cent upside potential from the stock's previous day close of ₹378.30.

The brokerage firm cited the robust growth outlook and recent price hike as supporting the company's earnings while the valuation is attractive.

"Coal India produces over 75 per cent of India’s coal, with 80 per cent supplied to the power sector. Thermal power accounts for nearly 75 per cent of electricity generation. As India is marching toward becoming a $5 trillion economy, coal demand is expected to reach 1.3-1.5 billion tonnes by 2030. Coal India is well-positioned to benefit from this stable demand," Motilal said.

Motilal estimates Coal India's production to clock a 6 per cent CAGR over FY24-27, with 15 per cent dispatches via e-auction to result in higher NSR and better margins.

"The recent stock correction offers an attractive valuation, with the stock trading at 3.3 times on FY27E EV/EBITDA, below its 10-year historical average. We reiterate our buy rating with a target price of ₹480, valuing the stock at 4.5 times FY27E EV/EBITDA. Coal India remains our top pick in the sector," said Motilal.

Vinod Nair, the head of research at Geojit Financial Services, pointed out that going forward, efforts to expand operations, including exploring coal gasification projects and renewable energy, are expected to drive Coal India's growth.

Nair has a hold rating on the stock due to lower price realisation and a slowdown in volume growth.

"Despite recent challenges, improvements in e-auction sales, rising power demand, and a strong balance sheet are positive indicators. Additionally, it offers an appealing dividend yield of around 7 per cent, making it a convincing option for income-focused investors," said Nair.

Coal India stock: What do technical charts indicate?

The stock's price action suggests a bullish reversal from the bottom as it consolidates while forming higher lows. Significant volume on the daily chart also signals potential strength in the ongoing trend.

However, experts say investors should wait for the stock to rise above ₹380-385 before taking positions.

"Coal India is currently consolidating between ₹370- ₹385, trading near ₹382. The R3 Camarilla resistance aligns around ₹385, making it a key level to watch. A daily close above ₹385 could trigger an upward move toward ₹400. However, failure to close above this resistance may lead to a retracement to ₹370," said Jigar S. Patel, Senior Manager of Equity Research at Anand Rathi Share and Stock Brokers.

"Given this setup, it’s best to adopt a wait-and-watch approach until a decisive breakout or breakdown occurs. Traders should monitor price action closely before taking positions, as a confirmed breakout could provide a strong directional move," Patel said.

Mandar Bhojane, an equity research analyst at Choice Broking, pointed out that Coal India is currently taking strong support at the ₹350 level on the monthly chart, reinforcing its significance as a key demand zone. The stock also respects a rising trendline on the weekly chart, indicating a sustained uptrend.

"If the stock manages to close above the ₹380 level, it could unlock further upside potential of approximately 15 per cent, with a target price of ₹420. Any dip towards ₹360 can be considered a buying opportunity for further gains, as the stock remains well-supported," said Bhojane.

"The immediate support is positioned at 350, aligning with the long-term monthly support, while the immediate resistance is at 390, marking a key hurdle for further momentum," Bhojane said.

According to Bhojane, the ₹350 level is a crucial support. A breakdown below this level would indicate weakness.

"Coal India stock is trading above its 200-day EMA (exponential moving average), reflecting a bullish undertone. The RSI is currently at 57 and trending upward, indicating a gradual shift in momentum. If the price sustains above key levels, the stock could witness a strong upward move in the coming sessions," said Bhojane.

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Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.