Attractive dividend yield of 8%
For fiscal year 2020-21, Coal India declared a dividend of Rs 12.5 per share in total. The first ex-dividend date was November 19 and the second was March 15, 2021. The first dividend was Rs 7.5 and the second was Rs 5. Now if you take the current market price of Rs 153, the yield of the dividend runs at 8.16%.
|Current market price||Dividend declared during fiscal year 20-21||Dividend yield|
|153 rupees||12.5 rupees||8.16%|
Since banks, at least the big private sector banks and state banks, offer a maximum interest rate of 5.5 on deposits, that dividend yield of over 8% is now bad at all.
Dividend yields could rise further
So far, for fiscal year 2021-2022, the company has yet to declare a dividend. This means that those who buy the shares could receive dividends in the future. Another thing to note as there is a possibility that the government will declare an even higher dividend this year. The government is running a huge budget deficit and it is possible for PSUs to declare higher dividends. If that happens, the yields could increase even more.
Recently, the company reported its quarterly figures, which were not very good. For the quarter ending June 30, 2021, the company reported total consolidated income of Rs 25,963.12 crore, down -7.19% from the previous quarter. The company’s achievements and bottom line were also not too big. Brokerages remain bullish on Coal India stock.
What do brokers say?
ICICI Securities has set a target price of Rs 253 on the share. According to the brokerage, recent events leading to a supply shortage have highlighted the importance and necessity of coal until large-scale storage solutions become viable. “High global coal prices and supply chain bottlenecks would likely make Coal India a preferred coal supplier for domestic consumers in the medium term,” the brokerage said. CLSA has also launched a call to buy shares of Coal India with a target price of Rs 210. This price is significantly lower than the price set by ICICI Securities.
“Second quarter EBITDA was lower than estimates on higher costs and lower achievements, however ex-OBR (load removal) EBITDA fell 5 percent quarter over quarter to reach 272 rupees per tonne. Receivables fell to 14,900 crore rupees, “the brokerage said in a statement. report.
We believe that the stock’s sharp fall after the quarterly figures offers good dividend opportunities.
Investing in stocks presents a risk of financial loss. Investors should therefore exercise caution. Greynium Information Technologies and the author are not responsible for any losses caused as a result of decisions based on the article. Caution is required, as stock markets have more than doubled from the lows induced by Covid.