Today's Opening - 215
Today's High - 217
Today's Low - 213
Today's Closing - 215
Technical Indicators:
Technical Indicators:
I am writing on this stock for the first time.
Marginal positive closing today with low volumes. The stock price has remained below the 5-day Exponential Moving Average (EMA) broadly since Jan last year.
Marginal positive closing today with low volumes. The stock price has remained below the 5-day Exponential Moving Average (EMA) broadly since Jan last year.
The 14-day Negative Directional Index has been stronger than the Positive Directional Index since 4th Sep 2018.
The 2-day Relative Strength Index had remained below 50 since 30th Oct last year. The 12, 26-day Moving Average Convergence Divergence has been negative since 1st Nov 2018. The 20-day Commodity Channel Index too has been negative since 28th Dec.
Company Activity:
Coal India (CIL) is the world's biggest coal miner and therefore has been rightfully accorded the Maharatna status. The government holds 72.9% stake in the company. The company board has approved a buyback at Rs 235 per share. This is the second buyback by the company in two years. CIL had bought back at Rs 335 per share in 2017. Coal supply by CIL to the power sector has increased by 7.3% this year. This supply is likely to further increase because of the opening of the Dhanbad-Chandrapura line, which shall facilitate faster evacuation of coal from Bharat Coking Coal, a CIL arm. The increased coal supply has resulted in building up of comfortable coal stock at thermal power plants. The power plants are now having coal stock which is sufficient for 13 days. The resultant benefit of higher coal production is that the company has reported a more than 50% profit growth in Q3.
Stock Outlook:
The 2-day Relative Strength Index had remained below 50 since 30th Oct last year. The 12, 26-day Moving Average Convergence Divergence has been negative since 1st Nov 2018. The 20-day Commodity Channel Index too has been negative since 28th Dec.
Company Activity:
Coal India (CIL) is the world's biggest coal miner and therefore has been rightfully accorded the Maharatna status. The government holds 72.9% stake in the company. The company board has approved a buyback at Rs 235 per share. This is the second buyback by the company in two years. CIL had bought back at Rs 335 per share in 2017. Coal supply by CIL to the power sector has increased by 7.3% this year. This supply is likely to further increase because of the opening of the Dhanbad-Chandrapura line, which shall facilitate faster evacuation of coal from Bharat Coking Coal, a CIL arm. The increased coal supply has resulted in building up of comfortable coal stock at thermal power plants. The power plants are now having coal stock which is sufficient for 13 days. The resultant benefit of higher coal production is that the company has reported a more than 50% profit growth in Q3.
Stock Outlook:
Inspite of the recent good results, Coal India has not been able to breakout of the long-term bear grip. After losing almost 18% over the past three months, the stock is currently trading at all-time lows with 211 acting as the support level. In the last one month, the stock tried breaking the resistance level of 228 twice on 30th Jan and 13th Feb, but failed both times. Unless the stock breaks the resistance of 228 decisively, the stock is expected to remain range bound between 211 and 228, with a negative bias.
However, I still recommend buying on dips with a long-term view. Reason for recommending a buy is because of the dividend paying track record of the company. Below is the trend for the last five years:
2018 - 165%
2017 - 188% +12% interim dividend = effectively 200%
2016 - 274%
2015 - 207%
2014 - 290%
The face value of the stock is Rs 10. Inspite of the record production this year, assuming a conservative dividend of 165% (lowest in the past five years) this year, the dividend works out to Rs 16.5 per share. Even if an investor buys the share at the current levels of Rs 215-220, the return on account of dividend itself is 7.5% and if the share price surges ahead, then of course the investor gains both ways. Now if the share price falls to further lows, then the ROI will only go up accordingly. Thus, I believe it's a good stock to buy at the current levels.
However, I still recommend buying on dips with a long-term view. Reason for recommending a buy is because of the dividend paying track record of the company. Below is the trend for the last five years:
2018 - 165%
2017 - 188% +12% interim dividend = effectively 200%
2016 - 274%
2015 - 207%
2014 - 290%
The face value of the stock is Rs 10. Inspite of the record production this year, assuming a conservative dividend of 165% (lowest in the past five years) this year, the dividend works out to Rs 16.5 per share. Even if an investor buys the share at the current levels of Rs 215-220, the return on account of dividend itself is 7.5% and if the share price surges ahead, then of course the investor gains both ways. Now if the share price falls to further lows, then the ROI will only go up accordingly. Thus, I believe it's a good stock to buy at the current levels.
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