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Coal India Ltd. (COAL) - Qtr. Update - Dated - May 29, 2013




Axis Capital Limited


29 May 2013





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Coal India’s recent price adjustment to drive ~5% increase in average realization of linkage coal. The company has announced price increase of 9-11% for low grade coal and a price cut of 12% for high grade coal. The price adjustment is across subsidiaries except Western Coalfields (only 1% price hike as low grade coal prices for the subsidiary already at high levels). Our EPS estimates stand revised to Rs 31 (Rs 29 earlier) and Rs 34 (Rs 31 earlier) for FY14 and FY15 respectively. However, our target price remains unchanged due to higher working capital and dividend per share assumption. Maintain BUY with DCF-based target price of Rs 434 (33% upside from CMP of Rs 327). Q4 highlights  Q4 consolidated EBITDA at Rs 69 bn (+54% YoY) was above our and Bloomberg estimate of Rs 55 bn. This was mainly due to incentive of Rs 13 bn from power companies for supplying coal in excess of FSA commitment in FY13. Adjusted for this, EBITDA was Rs 55 bn, in line with our estimate  Volumes: Sales volumes grew 6% YoY to 130 mnt. E-auction volumes were 14.9 mnt (11% of total volumes vs 9% in Q3)  Balance sheet: (a) Receivables doubled YoY to Rs 105 bn mainly due to increase in receivables from NTPC due to issues on coal quality and (b) net cash as af Mar-13 was Rs 610 bn  Dividend: Total dividend for FY13 is Rs 14/share, implying dividend payout of 50% for FY13. High payout ratio should continue in FY14 and FY15, in our view. We estimate dividend per share of Rs 15 and Rs 16 for FY14 and FY15 Regards, Jagdishwar Toppo (Executive Director – Materials) Institutional Equity Research Axis Capital Ltd Tel: +91 22 4325 1103 Nitesh Jain (Sr VP – Materials) Institutional Equity Research Axis Capital Ltd Tel: +91 22 4325 1145 Sujan Sanisetty (Asst VP – Materials) Institutional Equity Research Axis Capital Ltd Tel: +91 22 4325 1122

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