Coal India Ltd. share price target

Maintain BUY with a TP of Rs 305 (7.5x Sep-19 EV/EBITDA). Coal Indias (CIL) 2QFY18 results were below estimates (EBITDA at Rs 6.19bn vs est 14.65bn, 2x/(77.7% YoY/QoQ). The miss was mainly driven by higher employee expenses (Rs 91.55bn, 8.9/13.4x YoY/QoQ), which also included a provision of Rs 23bn towards wage settlement, finalized in October 2017. Contractual expense, the other key cost head, was sharply lower (Rs25.52bn, 7.9/(17.6)% YoY/QoQ). This might indicate lower pre-stripping and is likely a one-off.

than-expected uptick in e-auction realization* (INR1,614 v/s estimate of INR1,700) and reversals* pertaining to 1Q in washed coal (INR2,582 v/s estimate of INR3,200). FSA realization declined 5% YoY to INR1,224 (in line). EBITDA (ex-OBR) increased 46% YoY to INR12.9b, albeit off a low base. The reported numbers were also impacted by employee wage negotiation provision (~INR23b). The provision is ad-hoc pending final implementation of the negotiation agreement. There was also de-stocking of some high cost inventories, driving increase in reported expenses....

Domestic coal production rose 10.6% YoY to 47.5mt, while dispatches are estimated to have increased 14.9% YoY to 52.3mt in September 2017. Imports were down 7.7% YoY to 10.3mt in September, but the rate of decline against the last few months is moderating. We estimate coal demand growth of ~3% YoY to ~66mt in September. Demand...

We now look forward to many upsides. COAL is planning to manage its costs by closing its loss-making underground mines, the contribution of which to overall volumes is insignificant, but losses are meaningful. COAL is also planning to lower operating costs by reducing overtime and VRS. With clarity on the impact of the wage hike, COAL can look forward to a price hike. We are not factoring in any price hike in our models....

Maintain BUY with a TP of Rs 300 (7.0x June 19 EV/EBITDA). Coal Indias (CIL) recent performance has been uninspiring: flat offtake, lowest FSA realisations since 3QFY12 despite prices hikes, and weak e-auction premia. This has weighed on the numbers with LTM EBITDA down 27% and adjusted PAT (ex-OBR provisions) down 25% YoY. Coal offtake should improve hereon, given restocking demand from power plants. Third party sampling for 100% of its dispatches, lower taxation and continued discounts given to landed parity prices should ensure bottoming out of realisations.

Muted Quarterly Performance; Maintain BUY on Improved Outlook In line with our estimate, Coal India (CIL) has delivered a muted performance in 1QFY18 with its net profit declining by 23.3% YoY to Rs23.5bn. Further, its EBITDA fell by 17.8% YoY to Rs35.2bn primarily due to higher provisioning towards pending wage negotiations and weak Fuel Supply Agreement (FSA) realisations due to grade slippages. On a positive note, its consolidated revenue increased by 4.3% YoY to Rs205bn driven by 3.1% YoY rise in coal off-take, while average realisation remained flat on YoY comparison. Looking ahead, we expect CIL's RoE & RoCE to improve on the back of higher realisation, improvement in margins and...

Revenue fell by 17.93% to Rs. 18404.32 Cr in Q1FY18 when compared to the previous quarter Revenue fell by 17.93% to Rs. 18404.32 Cr in Q1FY18 when compared to the previous quarter

During the first four months of FY18 (April-July 2017), coal sales volumes registered growth of 4.1% YoY to 181.7 MT. Going forward, we expect the traction in sales volume to pick up. We expect sales volumes to grow...

State-owned Coal India Ltd.'s net profit declined for the fifth straight quarter, missing market estimates, on account of higher employee costs. Coal India (CIL) has posted 23% drop in consolidated net profit at Rs 2351.21 crore in spite of...

ff Higher Employee Cost Drags Operating Margins: CIL's EBITDA declined by 39.2% YoY to Rs33.8bn primarily due to 17.7% YoY rise in employee cost and a one-time provisioning of Rs8bn towards grade slippage claims in FY17. Thus, EBITDA margins declined 1,070bps YoY to 13.6% on the back of 34.7% rise in other expenses. Notably, higher e-auction volume was offset by lower-than-expected e-auction realisation. However, cost per tonne increased by...