Multibagger Stock of India for Year 2011

Without mincing our words we can state that Coal India is going to be the future multibagger stock of year 2011 as this stock has today toppled Reliance Industries as the country's most valued company and has ended billionaire Mukesh Ambani-led corporate giant's over four-year rein at the top of the market valuation charts. CIL had reported a 63% increase in profit at Rs 4,144 crore for the first quarter ended June 30, 2011, while RIL saw a 15% y-o-y rise in net at Rs 5,661 crore. As a net result today the stock saw a surge of over 2 per cent gain in its share price and has achieved a market value of Rs 2,51,296 crore, which was over Rs 4,000 crore more than that of private sector energy giant Reliance Industries Ltd (RIL). No doubt coal India is a navratna company and other public sector company can take guidance from this company. CIL is currently the country's most valued firm, followed by RIL, ONGC, TCS, ITC, Bharti Airtel, SBI, NTPC, Infosys and HDFC Bank in the top ten.

It is interesting to note that Reliance had toppled state-run ONGC over four years ago to become the country's most valued firm, and now it has been overtaken by another public sector major as the biggest company in terms of market valuation.

Valuation and Outlook
We give an accumulate rating for the stock with medium to long term perspective where one can see doubling to tripling of the price in less than 24 months and stock can gain 10 times price in a period of 10 years or so as it is a giant which is not only working but is working in the right direction. On analysis of its performance we find that on the back of judicious exploitation of the pricing power, CIL’s earnings are going to to grow at a CAGR of 24% during FY11-13, despite substantial escalation in wage cost, uncertain regulatory environment and elevated logistic bottlenecks. Thus at a conservative rate one must have this stock in his or her portfolio. The traders and investors can add this stock as a systematic plan in their portfolio.