Company: Coal India
Broking House: Motilal Oswal Rating: Buy
Price Target: `325
Coal India’s production is expected to be hit by environment protection norms — by 16 million tonnes in FY11 and 39 million tonnes in FY12. Meanwhile, it is also expected to increase sales via the e-auction route, where profits are much better.
For the first half of this year, prices via e-auction have been 73 per cent higher than the general price. The management sees the e-auction volume of FY11 at around 50 million tonnes, up from 45 million tonnes for the previous year.
On the cost front, staff costs are expected to go up 10 per cent during the year. However, Motilal Oswal expects Coal India to post a 15 per cent jump in profits for FY11.
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