Should you invest in world’s largest coal miner after a decline in top & bottom line?

World’s largest miner Coal India Ltd (CIL) on Monday reported a marginal decline in net profit of Coal India to Rs 4,586.78 crore by 1.10% in the quarter ended March 2021 as against Rs 4,637.95 crore during the previous quarter ended March 2020. Sales declined 4.25% to Rs 24,510.80 crore in the quarter ended March 2021 as against Rs 25,597.43 crore during the previous quarter ended March 2020.

The production of CIL during the quarter dropped to 203.42 million tonnes (MT) over 213.71 MT in the corresponding quarter of 2020.

The company’s offtake during the January-March period was at 164.89 MT, over 164.33 in the corresponding quarter of 2020.

CIL accounts for over 80% of domestic coal output. The company is eyeing one billion tonnes of output by 2023-24

For the full year, net profit declined 24.02% to Rs 12,699.89 crore in the year ended March 2021 as against Rs 16,714.19 crore during the previous year ended March 2020. Sales declined 7.46% to Rs 82,710.32 crore in the year ended March 2021 as against Rs 89,373.34 crore during the previous year ended March 2020.

Should you buy the stock despite a decline in top & bottom line. Here is what brokerages have to say about the stock

Citi | Price target: 160 | Upside: 1%

The e-auction prices will trade at a discount unless demand rises sharply. The next wage revision due in July is the key to watch out for. The company trades well below its historical mean but in line with regional players.

JP Morgan | Price target: Rs 200 | Upside: 27%

The e-auction price increase offsets higher costs. The final dividend per share at 80% is positive. On a 1-year basis, the company is the biggest laggard among Indian commodity stocks. It’s amongst cheapest stocks within our coverage universe, said JP Morgan

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