Q3FY19 result- Higher realisation and cost control boost EBITDA
Coal India reported higher than expected adj EBITDA ex-OBR of Rs. 79.7bn (IDFCe: Rs 64.2bn), up 50% yoy. The beat was on account of better than expected realisation under both FSA (due to higher premium in coal supplied via linkage auction and favourable product mix) and e-auction. EBITDA/t stood at Rs518, up 49% yoy. We note that the coal quality has improved which led the company to write back the provisions made earlier on grade slippage (write back ~Rs24.2m)
Key Positives: Higher realisation, lower ex-employee CoP
Key Negatives: Lower e-auction volumes, higher employee cost
Impact on financials: PAT up by 1% in FY19E and 4% in FY20E due to higher prices and lower cost partly offset by lower volume; Introduce FY21 Estimates
Valuation & view: Reiterate Outperformer with revised TP of Rs335
Volume growth is expected to be back on track from February 2019 after two months of yoy decline. Q4 earnings is expected to be driven by higher volume, in particular e-auction volume, incentives and lower employee cost. We expect FY19 DPS of Rs22 (~10% div yield) including interim dividend of Rs7.25 paid in December 2018. The stock is trading inexpensive at 3.7x FY20E EV/EBITDA and 6.9x FY20E P/E with RoE of 78%. We reduce EV/EBITDA multiple from 6.5x to 6.0x and as a result, revised target price to Rs335 (Rs355). Reiterate Outperformer. ​
Coal India is engaged in the identification, exploration, and production of coal in India. Co. offers coking coal primarily for use in steel making and metallurgical industries, and for hard coke manufacturing; semi coking coal for use as blend-able coal in steel making, merchant coke manufacturing, and other metallurgical industries; NLW coking coal for use in power utilities and non-core sector consumers; non-coking coal for use as thermal grade coal for power generation, as well as for cement, fertilizer, glass, ceramic, paper, chemical and brick manufacturing, and for other heating applications.
IDFC Securities Ltd., a subsidiary of the Infrastructure Development Finance Company (IDFC) wherein the Government of India holds a 20% interest, is India's leading equities broker catering to most of the prominent financial institutions, both foreign and domestic investing in Indian equities. A research team of experienced and dedicated experts ensures the flow of critically investigated stock ideas and portfolio strategies for our clients. Our coverage spans across various growth sectors such as agriculture, automobiles, Consumer Goods, Technology, Healthcare, Infrastructure, Media, Power, Real Estate, Telecom, Capital Goods, Logistics, Cement amongst other sectors. Our clients value us for our strong research-led investment ideas, superior client servicing track record and exceptional execution skills.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.