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Coal India Ltd. | Q4FY13 Result Update




IndiaNivesh Securities Pvt Ltd


27 May 2013





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 Result Update Coal India Ltd. | Q4FY13 Result Update | … Ahead of expectation Coal India reported Q4FY13 consolidated numbers ahead of our expectation. Revenue increased by 3% y-o-y to Rs 199.04 bn (vs. our expectation of Rs 188.50 bn) led by higher off-take and better than expected realization. Blended realizations (both from regulated and E-auction coal) for the March quarter increased to Rs 1,531 per tonne vs. Rs. 1,438 per tonne in Q3FY13, due to better mix of higher grade coal. On operational front, production in Q4FY13 stood at 143.3MT (Flat Y-o-Y) and dispatches stood 130 MT (up 5.7% Y-o-Y). EBITDA margin improved 599 bps q-o-q due to lower employee and overburden removal adjustment cost. Net profit the quarter came at Rs. 54.13 bn against our estimate of Rs. 47.97 bn. Valuation: Over the last couple of quarters, CIL witnessed several challenges on the policy, operational and administrative fronts. These include revised norms for environmental/forest clearances, uncertainty on mining tax/ MMDR Act, delays in land acquisition, e-auction diversion, commitment on FSA, wage negotiations. However, we believe that these concerns do not impact the structural long term story as 1) strong domestic coal demand; 2) monopoly in coal production in India; 3) ASP (Average selling price) significantly lower than global prices—potential for price hikes, and 4) one of the lowest cost producers globally. We maintain our buy rating on the stock with target price of Rs. 400.

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