U.S. Markets close in 5 hrs 13 mins

Coal India Limited (NSE:COALINDIA): What Are The Future Prospects?

Gavin Beck

The latest earnings update Coal India Limited (NSE:COALINDIA) released in March 2018 suggested that the business experienced a substantial headwind with earnings declining by -24.24%. Investors may find it useful to understand how market analysts predict Coal India’s earnings growth trajectory over the next few years and whether the future looks brighter. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in. Check out our latest analysis for Coal India

Analysts’ outlook for the upcoming year seems buoyant, with earnings growth more than doubling. Earnings continue to grow strongly in the next couple of years, finally generating ₹183.55b in 2021.

NSEI:COALINDIA Future Profit June 22nd 18

While it’s helpful to be aware of the growth year by year relative to today’s figure, it may be more valuable gauging the rate at which the business is rising or falling on average every year. The pro of this approach is that it removes the impact of near term flucuations and accounts for the overarching direction of Coal India’s earnings trajectory over time, which may be more relevant for long term investors. To compute this rate, I put a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 28.40%. This means, we can expect Coal India will grow its earnings by 28.40% every year for the next few years.

Next Steps:

For Coal India, I’ve compiled three relevant factors you should look at:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is COALINDIA worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether COALINDIA is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of COALINDIA? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.