Coal India (CIL) reported a subdued set of numbers wherein topline and PAT came in below our estimates while EBITDA came in line with our estimate. Reported PAT was lower than our estimate on the back of lower-than-expected other income and higher-than-expected tax rate .The company reported a total operating income of | 18421.9 crore, down 5.6% YoY lower than our estimate of | 19272.3 crore. The coal offtake came in line with our estimate at 133.2 MT up 2.9% YoY. However, the blended realisation during the quarter came in at | 1335.6/tonne, down 8.8% YoY, lower than our estimate of | 1401.6/tonne. FSA volume during the quarter came in at 107.7 MT with realisation of | 1239/tonne down 4.3% YoY (our estimate volume: ~108 MT, FSA realisation estimate: | 1315/tonne). The lower FSA realisation was on account of an inferior grade mix. Eauction volumes came in at 20.5 MT with realisation of | 1570/tonne down 28.1% YoY (our estimate of volume: ~17.0 MT and e-auction realisation estimate: | 1600/tonne).

Outlook and Valuation : During the current fiscal, Coal India registered meagre sales volume growth. For the first five months (April-August 2016), sales volumes remained flat at 211.1 MT primarily on the account of muted demand from end users. Subsequently, we have downward revised our sales volume estimate for FY17E and FY18E to 559 MT and 600 MT, respectively (from earlier sales volume estimate of 575 MT for FY17E and 625 MT for FY18E). We value the stock at 7.5x FY17E adjusted EV/EBITDA and arrive at a target price of | 340. We have a HOLD recommendation on Coal India.