Will the Coal India Share Price Rise in the Future?

Introduction

Covering approximately 86% of India's coal production, Coal India (CIL) is one of the most prominent coal suppliers to power and steel industries. As of April 2021, it has a workforce of 259,016, making it the single largest coal producer in the world and one of the largest corporate employers. Despite governmental challenges, CIL benefits from long-term infrastructure projects driving power and steel industry demand, setting a promising outlook for future growth.

Macroeconomic Situation

The infrastructure projects initiated by the government are currently going through an upcycle, which is expected to continue for several years. With typical project durations spanning 3 to 5 years, there is a sustained demand for coal in key sectors. This is especially pertinent for industries such as power and steel, where coal plays a critical role.

Company Fundamentals Analysis

Upon scrutinizing CIL’s financial performance, one notices several positive metrics, characterized by robust financial health and stability. Particularly noteworthy is the impressive dividend yield, which stands at approximately 11.6%. When compared to current bank interest rates, which are below 7%, a dividend yield of 11.6% significantly enhances its investment appeal.

CIL's status as a government-owned entity does present certain challenges, but the broader economic growth of India is expected to offset any performance issues over a shorter duration. Additionally, there is a trend of government dis-investments, leading to better management practices and potential improvements in operational efficiency in the near future.

Predicted Future Growth and Return

Based on the current financial health and the long-term infrastructure projects supporting demand, investors can reasonably expect a return of around 15 to 20%. Adding to this, the impressive dividend yield makes CIL a compelling investment choice. For investors comfortable with a growth rate in this range, this could be a worthwhile consideration.

Market Update (15th September 2021)

The latest update shows that the share price of Coal India has appreciated from 139 to 161, indicating the already achieved 15% target for the year. Market watchers are encouraged to keep a close eye on this stock.

Technical Analysis

Resistance and Support Levels:

As of now, the technical analysis indicates that the resistance level is set at 148, while the support level is at 126. A break on either side will determine the next move in the stock's price. It is important to note that this information is purely for observation purposes and should not be construed as a buy or sell recommendation.

Note: The update and share price information presented above are indicative and should be cross-verified with current market data and professional financial advice. For more learning and earning insights, follow our Telegram channel.