Coal India Ltd. share price target

1QFY20 revenue grew 4% YoY to ~INR249b (v/s est. INR237b) led by FSA realization increase of ~6% to INR1,370/t (v/s est. INR1,310/t), which was partly offset by lower e-auction realizations at INR2,155 (-10% YoY/-22% QoQ). Volumes were flat YoY at ~153mt (in-line). The increase in FSA realization was due to hike in coking coal prices at BCCL & CCL along with higher sales to the non-Power sector (~4mt higher YoY). Cash cost (ex-OBR) declined 1% YoY to INR1,135/t, despite higher wage bill. The company's wage bill was impacted (~INR2.7b) on an actuarial valuation...

The management has set a volume guidance of 660 million tonnes (MT) for FY20E, implying volume growth of 8.7 (CIL's FY19 production volume at 606.9 MT). Majority of CIL's volume growth is likely to be...

According to COAL, India will continue depending on coal to secure its energy needs over the next 10-20 years, particularly considering the country's low per capita electricity consumption and the government???s focus on assuring '24x7' power supply.

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...