Coal India Ltd. share price target

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...

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...

We re-instate our coverage on Coal India (CIL) and rate it Buy with a new TP of Rs375. We are enthused by the progress made by CIL in last six months in successfully tackling multiple headwinds around employee wage costs and FSA realisations and we expect CIL to deliver strong earnings growth over FY18-20E led by i) better demand and volume CAGR of 6%, ii) robust FSA pricing on the back of recent price increases and better grade compliance and iii) strong share of eauction volumes at 18% of total volumes coupled with higher realisations supported by favorable global coal prices. Stock trades at inexpensive valuations of 6x FY19E EV/EBITDA despite attractive return rations and we expect strong case...

The operating margin (OPM) shrank to 0.7% from 14.9% corresponding previous quarter due to spike in Employee benefit expenses. Employee benefit expense for the quarter jumped to Rs 16,653.86 crore from Rs 9,240.67 crore in the year ago-quarter. As a %age of sales and net of stock adjustments, employee benefits cost rose to 58.9% from 37% corresponding previous quarter. Thus, OP dropped by 94% to Rs 195.50 crore. Other income was up 12% to Rs 2,000 crore, thus, the PBIDT declined 58% to Rs 2,195.65 crore. The Company interest cost fell 2% to Rs 112.72 crore, while depreciation cost grew 10% to Rs 930.79 crore. Thus, the Profit before Tax (PBT) fell 73% to Rs 1,152.14 crore....