Analyst Corner: Maintain ‘buy’ on Coal India with target price of Rs 185

Coal India (CIL) posted a 7% YoY decrease each in its Feb-21 production and offtake. Key points Larger subsidiaries MCL and SECL lagged. NCL is likely to be the only subsidiary to achieve the FY21 production target. Inventory piled up further to 76mt. That said, we expect CIL’s performance to improve on the back of, demand traction from the power sector; and higher e-auction volume/premium. On cash accretion, we expect receivables to reduce progressively. Given the company’s improving operating outlook, we are raising the target PE to 9x (from 7.5x), in line with its historical average. This lifts the TP to Rs 185 (up from Rs 156). Maintain ‘BUY’.