Coal news and updates

Coal India surpasses ONGC in terms of market capitalisation; stock at all-time high

Coal India (CIL) rallied for the second straight session to hit all-time high today. With Wednesday's gains, the coal producer surpassed ONGC in terms of market capitalisation, thanks to a positive report on the stock by foreign brokerage Morgan Stanley.

As per the BSE data, free float marketcap of Coal India is at Rs 54,156.51 crore against ONGC's free float marketcap of Rs 42,736.38 crore.

The stock gained about 2 per cent in intraday trade on Wednesday. Over 5.87 lakh shares were traded in 30 minutes of trade against two-week average of 4.34 lakh shares.

Morgan Stanley has increased CIL's to Rs 530 from Rs 449 earlier as the company looks much better positioned for growth with low volatility vs rivals in Asia.

"CIL is among the best coal stocks in the region, based on comparative analysis versus regional peers of factors like growth in production and price trend. Its earnings volatility has been low; the revival of growth that is likely from here is bolstering the prospects now," the report said.

The brokerage house expects 31 per cent CAGR in the EBITDA over FY2015-18, showing conviction in its volume growth and pricing power.

"Receding government controls may help lift margins and returns", the report added.

Analysts at the Morgan Stanley expect CIL's volume growth to be at 250-300 basis points higher than the Street's expectations.

ET recently reported the coal ministry is considering a proposal to allow Coal India to hold auctions every year for the unregulated sector, instead of every five years as mentioned in a draft released earlier this month, according to officials.

It has also decided to introduce a mechanism to handle issues arising out of supply of coal that is different from the variety promised at the auctions.

source: http://economictimes.indiatimes.com