Coal India Ltd. share price target

8 Coal India's earnings (Rs 25.4bn; +15% yoy) were lower than our (Rs32bn) and consensus(Rs30bn)estimatesonweakrealisationsandhigheroperatingcosts. 8 Eauction realisation (Rs 1793/tonne) declined sharply by 28% yoy due to lower...

Coal India (CIL) reported in line consolidated net sales of Rs174.8bn, up by 8.2% yoy in 2QFY16, due to higher coal off-take (10.4% yoy). However, reported PAT, which was up by 16.0% yoy came in at Rs25.4bn, below our expectation of Rs27.5bn due to lower-than-expected operating margins. CIL has corrected recently by 25% as 1) the GoI intends to disinvest 10% stake and, 2) fall in e-auction coal prices is near term overhang on the stock. Earlier in the similar divestment event, stock did recover sharply post 10% stake sale in January, 2015. We believe that the positive initiatives taken by the Ministry to...

total offtake for the quarter increased 3.7%, leading to a 3.9% jump in revenues EBITDA margin increased 45bp yoy to 26% as higher staff costs and contractual expenses were offset by revenue growth and lower material and provisioning expenses. EBITDA stood at Rs 5,399crs....

PAT hit by operating cost; Strong fundamentals intact Coal India (CIL) reported Rs195bn consolidated net sales in 1QFY16, in line with our expectation (Rs192bn) as compared to Rs183bn in 1QFY15, due to higher coal off-take (8.2%) yoy. However, reported PAT was down by 6.7% yoy to Rs37.6bn below our expectation of Rs44.0bn due to lower operating margins, lower other income & higher provision for tax. We like Coal India due to its strong balance sheet, huge reserves & strong fundamentals. We believe that the positive initiatives from Ministry to address fuel issues are expected to bring in faster developments...

6 coal blocks will be auctioned to non-regulated sector participants in Round III of the process that kick-started in February 2015. We expect the bidding aggression seen in the initial 2 rounds to moderate, given the hope of an improved domestic fuel supply situation as Coal India?s off-take accelerates.

Sales at Rs 207bn (+4% yoy) were in line with our estimate led by higher FSA sales volumes.Productionwasup6%yoyto152mntonnesandsalesdespatcheswereup4% yoyto135mntonnes.BlendedrealizationwasflatyoyatRs1,544/tonne....

Coal India (CIL) reported a strong operating performance (EBITDA Rs 69.7bn, 5.4% YoY). This was driven both by off-take volumes (up ~3.7% YoY) and realisations (flattish despite lower e-auctions volumes YoY). On a sequential basis however, e-Auction volumes revived (10.3% vs 4.9% in 3Q) back to normal.

Media reports have highlighted that CIL?s e-auction volumes have been uncapped (vs 7% cap agreed upon earlier) and are likely to revert to old normal (~10%). This reaffirms our long-held view of unsustainability of limits on e-Auction volumes, especially with a view to divert the volumes to FSA consumers (mainly power). The modes of offtake for the two categories make the caps difficult to sustain. Positive comments from the power consumers on improving coal stock would have also helped.

Buy on dips to Rs 346 - Rs 355 for Target of Rs 390 in 1 quarter

Coal India (CIL) results were below estimates (EBITDA Rs 44.9bn vs. est Rs 58.3bn) as e-auction volumes halved (4.5% off-take vs 12.9% YoY and 9.6% QoQ). However, FSA volumes jumped 17.5% YoY (up 8% YTD) even as overall off-take growth remains moderate (3.8% YoY).