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On Wednesday, BofA Securities revised the price target for Coal India Ltd (NSE:COAL:IN) shares, lowering it to INR455 from INR535, while continuing to endorse the stock with a Buy rating. The adjustment follows Coal India’s third-quarter financial results for fiscal year 2025, which revealed an EBITDA of INR123 billion, a decline of 5% year-over-year but a significant 43% increase from the previous quarter.
The reported EBITDA surpassed BofA Securities’ estimates by 8%, primarily driven by stronger-than-anticipated realizations and an unexpected writeback of overburden removal (OBR) costs. These gains were partly offset by increased contractual expenses. Coal India’s blended realizations came in at INR1,667 per ton, down 3% year-over-year but up 3% from the previous quarter, which was 5% higher than BofA Securities’ expectations.
The improvement in fiscal quarter realizations was attributed to a 4% quarter-over-quarter rise in FSA realizations, likely due to the normalization of the grade mix, and e-auction premiums that exceeded expectations at an increase of 76% compared to the anticipated 54%.
Despite the operational EBITDA surpassing forecasts, Coal India’s recurring profit after tax (PAT) for the quarter was INR84 billion, down 16% year-over-year, aligning closely with BofA Securities’ projections. This was mainly due to higher-than-anticipated depreciation costs, including INR7.6 billion related to the impairment of stripping assets.
Additionally, Coal India announced a second interim dividend of INR5.6 per share for the fiscal year 2025. In light of the recent financial outcomes, BofA Securities has adjusted its earnings estimates for Coal India for the fiscal years 2025 to 2027, reducing them by 2-7%. Despite the revised price target and earnings forecast, BofA Securities maintains its positive outlook on the company, citing a healthy projected dividend yield of 9% for fiscal year 2026 and attractive valuations. The firm’s analysts reiterate their Buy rating on Coal India’s stock.
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