Coal India Ltd. share price target

In light of the falling international coal prices, and expected fall in the e-auction premium, we downgrade CIL to HOLD from BUY.

Coal India (CIL) has reported another strong print in Q3FY23. Revenue increased 23.7% YoY to Rs352bn, supported by 1.2% YoY increase in offtake at 175.8mnte and 23.1% YoY increase in average realisation at Rs1,843/te. EBITDA at Rs104bn was 52.2% higher YoY, while the company clocked an EBITDA/te of Rs591 (up 50.5% YoY).

Coal India (CIL) has reported another good print in Q2FY23. Revenue increased 28.1%
YoY to Rs298bn, supported by 5.1% YoY increase in offtake at 154.5mnte and 23% YoY increase in average realisation at Rs1,781/te.

We arrive at our target price of Rs 275/share (from Rs 262/share), implying an upside of 10.3% from the CMP.

We met the management of Coal India (CIL) to understand the outlook for H2FY23 particularly in terms of volumes and e-auctions.

Coal India (CIL) has maintained strong operational growth on the back of increased production and higher rake loading, buoyed by high domestic coal demand and continued elevated international coal prices.

CIL is facing pressure to increase its production on the back of demand increase and reduction in generation by imported coal-based plants.