Value in Coal India's reserves.

Byline: M. V. S. Santosh Kumar

Fresh investments with a three-year horizon can be considered in the Coal India stock, the world's largest coal mining company in terms of coal reserves. The stock has lost close to 29 per cent in the last seven months and valuations are 46 per cent below the peak.

Under-performance of the stock can be attributed mainly to the company missing production targets due to inclement weather, concerns of higher wage bill and laws proposing profit-sharing with the locals. News of the government eyeing Coal India's cash for meeting its disinvestment targets also took its toll on the stock.

These concerns seem to be priced in limiting the downside for the stock and providing good potential for gains. Being a near-monopoly in the Indian coal mining sector, the company can take advantage of chronic shortage of coal.

The company's lower …