Currently, dividend yield has increased to 9-10% with current valuations at 45-50% discount to long-term averages, which is a typical trait of a commodity stock at the peak of an earnings cycle. Selling price of FSA coal is currently at 50% discount to E-auction prices i.e. market price, which means there is still significant pricing power left with the company. Only 19% of the revenue is subject to the market price of coal and is cyclical in nature. If we were to model historically the lowest E- auction price of INR1,536/t (in FY17), the stock would still be trading at 4.3x EV/EBITDA, P/E of 9.2x and dividend yield of ~8%, which means valuations would still range between 35-40% discount to historical averages. REs share in the power mix can reach maximum of 35% in India, which means that an average demand of 250-280GW will have to be met by coal.

55% to Rs 6,787.81 crore. Coal India's production increased by 2.6% at 155.97 million tonnes (MT) during quarter, meanwhile Offtake raised by 0.9% to 153.83 MT. CIL's average realizations increased 11.6% to Rs 1,520 per tonne. Coal India (CIL) total income from operation inclined 15% to Rs 25,045.83 crore for the third quarter ended December 2018, due to rise in sales volume and in realization. Coal India's production increased by 2.6% at 155.97 million tonnes (MT) during quarter, meanwhile Offtake...

Coal India reported a healthy set of Q3FY19 numbers albeit lower eauction volumes acted as a dampener. E-auction volumes were at 14.7 million tonnes (MT), down 44% YoY, 17% QoQ. E-auction realisations came in at | 2847/tonne, up 42% YoY, 10% QoQ Sales volumes were at 154 MT, up 1% YoY. FSA volumes during the quarter were at 135.8 MT, up 11% YoY. FSA realisations were at | 1334/tonne (up 13% YoY, 2% QoQ vs. our estimate: | 1315/tonne) Topline came in at | 25045.8 crore, up 15% YoY, 14% QoQ, higher than our estimate of | 24545.7 crore. Reported EBITDA came in at...

We maintain our SELL rating on COAL. COALs Revenue/EBITDA/PAT of Rs 250.5/67.9/ 45.7bn were well ahead of street estimates of Rs 238.2/50.1/38.1bn, driven by 1) good FSA realization at Rs 1,334/t (+2% q/q, +13% y/y) 2) strong e-auction realization at Rs 2,892/t (+10% q/q, +43% y/y & 113% premium to FSA price vs 98/69% in 2QFY19/3QFY18) 3) in-line costs 4) operating leverage due to higher sales volume at 154 mt (+12% q/q).

12 February 2019 COAL has managed to keep cost under control despite inflationary pressure Revenues increased 16% YoY to ~INR250b, as against our est. of INR239b, led by (a) FSA realization increase of ~13% to INR1,334/t, as against our est. of INR1,310/t, (b) e-auction realization increase of 43% (10% QoQ) to INR2,847/t, as against our est. of INR2,500/t, and (c) volume increase of ~2% to 154.1mt (volume mix was weak). Cash cost (ex-OBR) was flat YoY at INR1,001/t. Adj. EBITDA (ex-OBR) increased 44% YoY to ~INR79b, driven by higher realization and flattish cost. There is a change in accounting of provisions from gross to net basis. The provisions have decreased with corresponding decrease in revenue and other income. 1QFY19 and 2QFY19 financials have also been restated, which boosted EBITDA, but with no impact on PAT. PAT increased 52% YoY to INR45.6b, beating our est. of INR35.7b, driven by better-than-expected FSA realization and lower cost.

We believe that on a long-term basis, continued restriction on evacuation will limit the overall potential of the company. However, given the strong cash flows, we expect the company to declare strong dividends going forward. At the CMP of Rs 223, we build in 10% dividend yield and believe that the stock is...

8 January 2019 reached a point where growth of dispatches will suffer not only in FY19E, but also in FY20E. COAL builds inventories during 2H of any financial year in order to meet demand in the 1H of the next financial year, when production is usually lower due to seasonally high heat followed by monsoons. Various government agencies and COALs top management need to work on a war footing to address these issues, else production growth will suffer. Since inventories at power plants remain low, the restocking demand will continue to drive higher demand in FY20E as well. Therefore, we need to reduce E-auction volumes by 3% to 79mt in FY19E and by 25% to 69mt in FY20E. A scarcity of coal for non-power will ensure that E-auction prices remain high. EBITDA estimates by 5%/6% to INR242/274b for FY19E/20E on combined impact of reduction in volumes and increase in E-auction prices as discussed above.

Rich dividend yield on depressed earnings: Impacted by grade slippages, wage revision and elevated capex, COAL's FCFE grew at a tepid CAGR of 2.5% over FY14-FY18 less than half of growth in volumes. We expect FCFE growth to languish between 2.0-2.2% in FY19e-FY21e due to stable earnings...

A reversal in government policy (to substantially align prices with global prices and to invest surpluses profitably) is a huge (but unlikely) risk to our SELL call. COAL Indias business leaves barely enough cash flow, after paying for capex (with back ended benefits) & dividends. Our unflattering view on COAL derives from the grim reality that it serves the mission to supply coal at low prices to Indias power sector, with little regard for profits (let alone maximization).

Coal India (CIL) reported a mixed set of Q2FY19 numbers. Topline was above our estimates, EBITDA came in lower than our estimates while PAT was broadly in line with our estimates. Sales volumes came in at 137.3 MT, up 4% YoY. FSA volumes during the quarter came in at 116.8 MT, up 12% YoY, down 10% QoQ. FSA realisations were at | 1308/tonne (up 7% YoY, flattish QoQ; our estimate: | 1325/tonne). Eauction volume came in lower at 17.7 MT, down 24% YoY, 9% QoQ. The e-auction realisations came in at | 2592/tonne, up 61% YoY, 8% QoQ broadly in line with our estimate of | 2519/tonne...

Coal India Ltd Q2FY19 results Comment Revenue fell by 8.34% to Rs. 20712.71 Cr in Q2FY19 when compared to the previous quarter. On the other hand, it rose by 18.5% when compared with Q2FY18.

Reported EBITDA grew by 378% YoY to Rs39.1bn, while EBIDTA margin improved by 1,312bps YoY to 17.6% led by 2.2% YoY decline in employee expenses to Rs89.5bn vs. Rs91.5bn in 2QFY18. Notably, employee cost peaked to Rs426.3bn in FY18, as CIL provided for increase in gratuity limit from Rs1mn to Rs2mn and wage hike for executives and non-executives. We expect CIL's employee cost to normalise at Rs360-370bn in FY19E. Other operating income increased to Rs20.1bn (vs.Rs10.2bn in 2QFY18) owing introduction of evacuation charges facility of Rs50/tonne on all coal dispatches (except rapid loading system) in Dec'17. Its consolidated reported PAT...

Coal India (CIL) has posted over seven-fold growth in consolidated net profit at Rs 3,084.70 crore on the back of 22% gain in total income to Rs 22,198.06 crore for the second quarter ended September 2018, driven by its operating margin and higher volume. The operating margin (OPM) expanded to 17.6% from 4.5% in corresponding previous quarter. Thus, OP zoomed by 378% to Rs 3,914.23 crore. Coal India's production increased by 5.8% at 119.62 million tonnes (MT) during quarter, meanwhile Offtake raised by 4.4% to 137.33 MT. CIL's average realizations increased 13.5% to Rs 1,508 per tonne. Coal India (CIL) total income from operation inclined 22% to Rs 22,198.06 crore for the second...

12 November 2018 COAL is supplying higher share of production on a priority basis to the less- higher FSA realization (up ~7% YoY to INR1,308/t v/s our estimate of INR1,325/t), (2) higher e-auction realization (up 61% YoY/8% QoQ to INR2,592/t v/s our estimate of INR2,400/t) and (3) increased volumes (up ~6% to 137.3mt). lower-than-estimated e-auction volume and FSA realization and (3) higher cost in stock adjustment. Adj. PAT of INR30.8b came in lower than our estimate due to higher OBR provision, marginal revenue miss and higher cost of stock adjustment, partly offset by higher other income. However, COAL is benefitting from higher e-auction prices and operating leverage. We lower our e-auction volume estimate by 20mt to 82mt, raise our e-auction price estimate by INR800/t to INR2,500/t and increase our adj. We expect PAT CAGR (FY18-20) of ~27%, led by the full benefit of price hikes and evacuation charges, higher volumes and operating leverage.

Lower FSA realisations led the miss on blended levels: Volumes rose 4.4% YoY to 137.3mn (PLe:137mn) t. FSA volumes rose 11.7% YoY to 116.8mn (PLe: 115.4mn) t. Led by 9% price hike in non-coking coal in January-2018 and...

We reiterate Buy on Coal India (CIL) with revised TP of Rs365 as we expect re-rating with market finally appreciating the structural improvements like improved coal quality, better evacuation, significant increase in auction linked volumes and sharp reduction in working capital which provide strong earnings/cash flow visibility. We also expect strong upside to e-auction realisations given the strong global coal prices, weak rupee and strong underlying demand (from both power & non-power) which is expected to mitigate the headwind of higher diesel prices. Concerns around divestment capping stock returns in near term are overdone as...

ICICI Securities Ltd | Retail Equity Research Coal India's Q1FY19 numbers were higher than our estimates on all fronts. The sales volume came in at 153.4 million tonne (MT) (up 11.7% YoY), wherein blended realisations were at | 1476/tonne (up ~10% YoY). Fuel supply agreement (FSA) sales volumes came in at 130.4 MT (up 21.7% YoY) while FSA realisations during the quarter were at | 1313/tonne (up 9.3% YoY). E-auction volumes came in at 19.4 MT (down steeply by ~29% YoY). However, e-auction...

In-line Performance; Earnings Likely to Witness Sharp Improvement Consolidated reported PAT of Coal India (CIL) increased by 61% YoY to Rs37.8bn while net revenue grew by 26.6% YoY to Rs242.6bn owing to higher FSA realisation (+9.3% YoY to Rs1,313/tonne) led by improved e-auction realisation (+51% YoY to Rs2,399/tonne), healthy volume growth (+10.9% YoY to 153.4mt) and price hike benefit. Looking ahead, we expect CIL's profitability to witness sharp improvement backed by price hike benefit, while all operational negatives have already been factored in. Further, its RoE is expected to improve on the back of higher realisation, improved margin and optimum utilisation of assets. We maintain our BUY recommendation...

11.7% to 153.47 MT. CIL's average realizations improved 2.1% to Rs 1472 per tonne. Other income growth was flat at Rs 1,209.99 crore, thus, the PBIDT inclined 47% to Rs 6,942.45 crore. The Company interest cost fell 9% to Rs 110.34 crore, while depreciation cost grew 11%...

Consolidated net sales of Coal India (CIL) grew by 15.3% YoY to Rs269bn owing to higher FSA realisation (+2% YoY to Rs1,403/tonne), by improved e-auction realisation (+31% YoY to Rs2,112/ tonne) and healthy volume growth (+5% YoY to 159.6mt) coupled with price hike benefit. However, its reported PAT declined by 52.4% YoY to Rs12.9bn, which adjusted for gratuity (net of tax) zoomed by 137% YoY to Rs64bn. Looking ahead, we expect CIL's profitability to witness sharp improvement backed by price hike benefit, while all operational negatives have already been factored in. Further, its RoE are expected to improve on the back of higher realisation, improved margin and optimum utilisation of assets. We maintain our BUY recommendation on the...