Prabhudas Lilladher has maintained 'Accumulate' on Coal India (CIL) with target price of Rs 418 as against current market price (CMP) of Rs 394 in its report.
Commenting on the investment rationale, Prabhudas Lilladher said, ''Recently, Ministry of Environment and Forest (MoEF) issued circular providing one-time increase in production capacity by 4m tonnes (mt) for coal mining projects having capacity between 8 to 16mtpa. We view this as a step by the Ministry of Coal (MoC) for speedy increase in production, which has been constrained due to various bottlenecks.
We see a potential increase of 32mt in Coal India (CIL)'s production spread over couple of years. We maintain our Accumulate rating on the stock given its strong earnings, attractive return ratios and robust balance sheet.
The dedicated railway sub-group of the project monitoring group has expedited the clearance process for three crucial rail links, having the potential of loading 300mtpa of coal. Thanks to better co-ordination between Ministry of Railways and MoEF and friendly R&R policy of CIL, we believe that these rail links would adhere to their targeted commissioning schedule of FY17.''
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