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Coal India (COAL) - Qtr. Update - Dtd. - August 13, 2012




Axis Capital Limited


14 Aug 2012





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Coal India’s (CIL’s) Q1FY13 EBITDA at Rs 54 bn was better than our expectation of Rs 47 bn due to lower employee and overburden costs. Consequently, PAT at Rs 44.5 (up 9% YoY) bn was higher than our estimate of Rs 41 bn. Key highlights  Blended realization improved 7% YoY to Rs 1,460/ton largely due to higher e-auction realization  Volumes: Production and offtake were up 6% YoY each at 102 mnt and 113 mnt respectively. CIL was able to liquidate its inventory due to higher rake availability during Apr-June ’12. As of date, total coal inventory stands at 55 mnt  Employee cost: Q1FY13 wage cost at Rs 60 bn was below quarterly run-rate of Rs 65 bn (based on management guidance of Rs 260 bn in FY13)  Signing of new FSA: CIL board has approved graded penalty system for the new FSA with a trigger level of 80% (60% from domestic source and 20% from imports) vs. 0.01% penalty earlier. CIL is unlikely to face any penalty as historically it has always met its FSA commitment and earned bonus. Also, higher cost of imported coal will be borne by power gencos Maintain estimates and BUY rating We retain our EPS estimates for FY13 and FY14 at Rs 26.1 and Rs 29.5 respectively. Maintain BUY with DCF-based target price of Rs 434, implying upside of 25% from CMP of Rs 348. Regards, Jagdishwar Toppo (Executive Director – Materials) Institutional Equity Research ENAM Securities Pvt. Ltd. Tel: +91 22 4325 1103 Nitesh Jain (Sr VP – Materials) Institutional Equity Research ENAM Securities Pvt. Ltd. Tel: +91 22 4325 1145 Sujan Sanisetty (Asst VP – Materials) Institutional Equity Research ENAM Securities Pvt. Ltd. Tel: +91 22 4325 1122

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