Coal India Ltd. share price target

28 May 2020 COAL has reduced production given the build-up in inventories at its own mines and power plants. Dispatches for COAL have increased over the past one week, even as power demand recovers and factories restart operations. As demand continues to recover and given the current focus on OBR, the company believes it would be in a better position to ramp up production. Of the ~170-180mt imported thermal coal in India, COAL plans to substitute ~100mt, thereby looking to improve off-take. ~18mt of coal has been auctioned and committed for off-take (as part of its import substitution drive). COAL has noted that it expects thermal power demand to continue at least for the next 10-15 years in the country. Accordingly, it plans to increase production to 1b ton over the next 3-5 years. While COAL is still finalizing its investment plan, it has set FY21 capex target at INR120b, which might increase in the coming years.

2 April 2020 Coal Indias (COAL) dispatches declined 10.3% YoY to 53.5mt in Mar20 due to a sharp fall in demand from the power sector. Indias nation-wide lockdown comes at a time when (a) power demand has mines has been ramped up following a heavy monsoon season. Accordingly, inventories at both coal mines and power plants have risen (refer to Exhibits 1/2) a general trend at the onset of summer, but higher than usual. On the other hand, with Industrial and Commercial consumers accounting for nearly ~50% of Indias power demand, generation has been severely dented over the past one week. Furthermore, given the must-run status for renewables in the country, the brunt of the demand decline is being borne by coal-based plants. Generation from coal-based plants fell ~40% YoY over March 25 (Exhibit 4). On account of such a sharp demand drop and higher coal inventories at power +6.5% YoY) (Exhibit 5).

At current level, the company is attractively trading at ~2.6x FY22 EV/EBITDA and 5.3x FY22 P/E. We reiterate our BUY rating with a roll forward target price of Rs. 202 based on 3.5x FY22E EV/EBITDA. FSA sales volume boosts topline QoQ Coal India's Q3FY20 revenue grew 13.8% QoQ to Rs. 23,190cr (-7.4% YoY), primarily driven by higher revenue from FSA and other operating income, which increased 20.6% QoQ and 16.3% QoQ, respectively. E-Auction's revenue declined 17.5% QoQ (38.1% YoY) due to lower sale volume of 9.8mt (-36.5% QoQ; -32.8% YoY), partially offset by higher average realization at Rs. 2,623/t (+29.9% QoQ; -7.9% YoY). FSA's...

Coal India Ltd is the largest coal producing company in the world. The company also produces non-coking coal and coking coal of various grades for diverse applications. The company's customer include large thermal power generation companies, steel and cement producers and other industrial companies in the public and private sector with many...

During the YTD current fiscal, CIL's production and offtake volumes witnessed a muted trend. One of the reasons for the same is extended monsoons. Production volume for the first 10 months (April-January 2020) of FY20 were at 451.5 million tonnes (MT) (down 3.9% YoY). Similarly, offtake volumes for April-January 2020 were at 473.3 MT (down 4.8% YoY). Going forward, we maintain our offtake volume assumption of 600 MT for FY20E and 625 MT for FY21E. CIL's offtake volume for FY19 was at 608 MT. EBITDA margins to hover around ~21-22%......

After 3 quarters of muted Rs 4bn revenue runrate, CIL is returning back to growth path. With Govt order book (49% in mix) moving into execution from 4QFY20, CIL will start delivering strong execution. EBIDTA margin expansion of 100-150bps may play out as number of sites is coming down and average order value is going up. Gross debt is stable at Rs 2.8bn though CIL needs to bring down unbilled revenue. We Maintain BUY. Key risks (1) Slowdown in real estate (2) Delay in debtors recovery & (3) Slowdown in Government Capex. Capacite Infraprojects Ltd (CIL) delivered Rev/EBIDTA/PAT beat of (1.2)/9.8/8% respectively. Despite this, headlines numbers remain weak, resulting in 15/3/5% cut to our FY20E Rev/EBIDTA/APAT estimate. We believe 3QFY20 execution has bottomed and recovery is expected from 4QFY20. We maintain BUY on CIL with an increased TP of Rs 360/sh (12.8x FY21E EPS).

12 February 2020 Coal Indias (COAL) results highlight the impact of lower volume offtake amid subdued thermal power demand. FSA realizations though were higher YoY on account of increased share to non-power and better grade. Production at the companys mines has started to ramp up post heavy monsoon, and we expect offtake to improve as power demand recovers. The stock trades attractively at ~3x FY21E EV/adj. EBITDA and offers a dividend yield of ~10%. Maintain Buy with a target price of INR258/sh. EBITDA (ex-OBR) declined 22% YoY to ~INR62b (our driven better-than-expected realizations. Other income rose 21% YoY to decline in sales volumes. Volumes were down 8% YoY at ~142mt (in-line). FSA volumes declined 6% YoY to 127.7mt. However, realization was up 6% YoY at INR1,411/t due to higher non-power segment sales and better grade realized. E-auction volumes declined 33% YoY to 9.8mt.

Volumes revived in Q4; low base to help volumes grow 5%+ in FY21E Coal India (COAL) reported Q3FY20 EBITDA in line with our expectation. Impacted by extended monsoon and local issues, volumes fell 8%YoY/6%YoY in Q3FY20/9MFY20. Volumes improved meaningfully December onwards with growth at 6% on the back of better condition of mines (after heavy rains), receding contractor and local level issues. In spite of weakness in E-auction...

to 17.7%. Thus, Operating Profit (OP) dropped 16% to Rs 3,611.16 crore. Performance for quarter ended September 2019 Coal India (CIL) total income from operation dropped 7% to Rs 20,382.63 crore for the second quarter ended September 2019, due to softer sales volume as prolonged rains disrupted...

Coal India (CIL) reported a steady set of Q2FY20 numbers. Higher-thanexpected FSA realisations supported overall earnings for the quarter. The company reported a sales volume of 122 million tonne (MT) (down ~11% YoY). FSA sales volume came in at 104 MT (broadly in line with our estimate of | 105 MT) while FSA realisations during the quarter was at | 1439/tonne (up 5% QoQ, higher than our estimate of | 1350/tonne). E-auction volumes came in at 15 MT (broadly in line with our estimate of 14 MT) while the eauction realisations were at | 2020/tonne (down 6% QoQ, broadly in line with our estimate of | 2000/tonne). The company reported a total operating income of | 20383 crore, down 7% YoY. EBITDA came in at | 3611.2 crore,...