MOSL: COAL INDIA (Buy)-Better FSA realization drives beat-Valuations attractive
COAL INDIA: Better FSA realization drives beat; Valuations attractive; Dividend yield of 9-10%
(COAL IN, Mkt Cap USD17.6b, CMP INR204, TP INR278, 36% Upside, Buy)
- 1QFY20 revenue grew 4% YoY to ~INR249b (v/s est. INR237b) led by FSA realization increase of ~6% to INR1,370/t (v/s est. INR1,310/t), which was partly offset by lower e-auction realizations at INR2,155 (-10% YoY/-22% QoQ). Volumes were flat YoY at ~153mt (in-line). The increase in FSA realization was due to hike in coking coal prices at BCCL & CCL along with higher sales to the non-Power sector (~4mt higher YoY).
- Cash cost (ex-OBR) declined 1% YoY to INR1,135/t, despite higher wage bill. The company's wage bill was impacted (~INR2.7b) on an actuarial valuation given the fall in interest rates. Excluding wage bill, cash cost declined ~5% YoY.
- EBITDA (ex-OBR) increased 15% YoY to ~INR75b driven by higher FSA realization and lower cash costs.
- Adjusted PAT was up 22% YoY to INR46.3b (v/s est. INR39.3b), despite strong base (1QFY19 PAT grew 60% YoY). The beat to our estimate was driven by higher FSA realizations and higher other income.
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.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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