Coal India shares gain 3% on Morgan Stanley upgrade, global brokerage sees 16% upside

As per the latest business developments, Coal India shares advanced up to 3 percent in Tuesday's market session after global brokerage Morgan Stanley upgraded the stock to "overweight" from "equal-weight" on an improving earnings outlook.

Morgan Stanley has set a target price of Rs 480 per share, implying an upside potential of 16 percent from the previous closing level.

The brokerage stated accelerating thermal power demand, sharply reduced plant inventories and rising global thermal coal prices are anticipated to backing volumes and e-auction premiums.

These factors are anticipated to drive earnings upgrades and backing the stock's performance over the next few months, it stated.

Morgan Stanley revised its volume and e-auction premium estimates, resulting in a 20 percent upgrade to its FY27 earnings per share estimate.

At 6.6 times one-year forward price-to-earnings, the stock is trading around its long-term averages, the brokerage stated, adding that it anticipates the valuation multiple to sustain on the back of firm earnings upgrades.