Coal India's share price continued its five-day winning streak, reaching a new 52-week high of Rs 289 per share during afternoon trading. The stock opened at Rs 284.25. With a year-to-date rally of 28.31%, analysts from Sharekhan, a brokerage company, see a potential upside of 14.58% from the current market price of Rs 288.

Sharekhan is optimistic about Coal India's performance as it is on track to achieve its FY24 coal production guidance. The company has levers to sustain strong earnings growth, including a focus on increasing coal production, improving the volume mix with a rising share of non-power sector sales (up 43% year-on-year in the first five months of FY24), and benefiting from operating leverage. Strong free cash flow generation is expected to result in a continued high dividend payout.

Despite a significant 26% increase in Coal India's stock price, Sharekhan finds its valuation attractive at 7.2x/6.4x FY2024E/FY2025E earnings per share (EPS). Additionally, the stock offers a high dividend yield of 8-9%. Sharekhan also notes that the company's board has given in-principle approval to divest a 25% stake in Bharat Coking Coal Limited (BCCL), which, along with a potential listing, could unlock value.

Key risks identified by Sharekhan include lower-than-expected volume offtake due to weakness in electricity demand and realizations, especially for e-auction sales, which could impact margins and earnings outlook. Additionally, the government's divestment plan could act as an overhang on the stock. Sharekhan maintains its Buy recommendation on Coal India with a revised price target (PT) of Rs. 330, valued at 7.5x its FY2025E EPS.