MOSL: COAL INDIA (Buy)-Strong op. beat on higher FSA realization and lower cost-Grade concerns behind
(COAL IN, Mkt Cap USD26.3b, CMP INR282, TP INR394, 40% Upside, Buy)
- COAL's 4QFY18 revenue grew 16% YoY to INR269b (est. of INR250b), led by FSA realization increase of 2% YoY (+19% QoQ) to INR1,403/t (est. of INR1,338) on account of price hike benefit, e-auction realization increase of 31% YoY (+6% QoQ) to INR2,112/t (est. of INR1,974) and volume increase of ~5% YoY/QoQ to 159mt. Revenue growth was also aided by evacuation charges of INR50/t introduced in December 2017.
- EBITDA (ex-OBR) increased 107% YoY to ~INR101b, well ahead of our estimate of INR67b, driven by higher FSA revenue (INR11b beat), increased operating income (INR6b beat), and lower employee and other expenses. EBITDA is adjusted for gratuity provision of INR73.8b.
- Cost of production (ex-OBR) declined 12% YoY to INR993/t.
- Other income increased 8% YoY to INR20b (est. of INR9b), boosted by provision reversals and penalty income. Depreciation increased 10% YoY to INR9.3b. PAT, adjusted for gratuity (net of tax), increased 127% YoY to INR61.7b (est. of INR51b). Reported PAT was down 52% YoY to INR12.9b.
- For FY18, sales grew 10% YoY to INR859b, volumes grew 7% YoY to 580mt, adj. EBITDA (ex-OBR) grew 36% YoY to INR203b and adj. PAT grew 28% YoY.
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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