Offtake to grow at CAGR of 3.4% in FY19-21E For Q4FY19, FSA sales volumes came in at 142.4 MT (up 12.7% YoY, 4.9% QoQ). FSA realisation during the quarter was at | 1460/tonne (vs. | 1403/tonne in Q4FY18), higher than our estimate of | 1350/tonne. E-auction volumes were at 16.7 MT, up 13.7% QoQ, marginally higher than our estimate of 16.3 MT. E-auction realisations were down 3.3% QoQ to | 2754/tonne. For FY19, CIL reported a sales volume of 608.1 MT, up 4.8% YoY. Going forward, we model CIL's offtake volume of 625 MT for FY20E and...

COAL needs to spend c40+% (FY15-21E) of OCF on capex, yet EBIT growth is mainly driven by price hikes. COAL is a cash (dividend) cow as it pays all FCF after capex as dividends. In our view, this is the only benefit that minority shareholders get. We thus believe a realistic way to value COAL is to focus on its dividend paying potential, hence we use DDM to value COAL. We maintain our SELL rating on COAL with a TP of Rs199. COAL reported strong Q4FY19 that beat market expectations comprehensively driven by better FSA realization & bonus related to FSA vol, which were offset partly by higher than expected employee cost. Overall, the result was a beat at the Revenue / EBITDA/PAT level. More importantly, this result doesn't setup COAL in a position to even meet our FY19 div est. of Rs 17/sh. Dividend announced thus far in FY19E is Rs 13.1/sh and there is little scope for a further round of div for the year.

grew to Rs 8,212.22 crore from Rs 193.34 crore corresponding previous quarter. Other income declined 10% to Rs 1,819.58 crore, thus, the PBIDT inclined 355% to Rs 10,031.80 crore. The Company interest cost fell 9% to Rs 101.93 crore, while depreciation cost grew 11% to Rs...

by adjusting from revenue against earlier practice of providing as cost. Accordingly, revenues for FY19 were revised lower by Rs5bn to account for grade slippage. Hence, we keep our estimates unchanged for FY20e and FY21e as volatile grade and lower E-auction volumes would offset higher pregrade adjustment realisations. Volumes growth continued to remain weak due to structural issues related to land acquisition, logistics and statutory clearances. Volumes for Apr'19 grew...

Revenue grew 6% YoY to ~INR285b (our estimate: INR283b) in 4QFY19, led by an increase of (a) ~4% YoY in FSA realization (INR1,460/t v/s our estimate of INR1,388), (b) 30% in e-auction realization (INR2,754/t v/s our estimate of INR2,619) and (c) ~2% in volumes (163.1mt; volume mix was weak). FSA realization was supported by better grade management and mine mix. Cash cost (ex-OBR) increased 5% YoY to INR1,110/t due to a higher wage bill (includes INR6.5b for prior-period pension provision and INR3-4b for bonus provisions). Excluding the wage bill, cash cost was down ~4% YoY....

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.

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.

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...

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...

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...