Nomura starts Coal India stock with ‘buy’

Nomura has initiated coverage of Coal India stock with a ‘buy’ rating and a target price of 433 rupees citing India’s thermal coal supply shortage,which makes ample room for price hikes and the favourable geological features of its reserves to sustain low cost of production.

We expect CIL’s cash chest to rise 54 percent from $10.2bn as of FY11 to $15.7bn by FY13,Nomura said in note. Better-than-expected realizations,indications of pricing flexibility in FY13 post the imposition of a mining tax,would augur well for earnings growth,it said adding it sees auctioning of coal blocks by the government a key to price discovery of its huge coal resources.

At 11.05 a.m shares in the world’s largest coal miner were down 0.33 percent at 367.80 rupees

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