MOSL: COAL INDIA (Buy)-Employee provisioning, other income impact results-Volume growth accelerating
​Coal India: Employee provisioning, other income impact results; Volume growth accelerating, concerns behind; Buy
(coal IN, Mkt Cap USD27.1b, CMP INR285, TP INR335, 18% Upside, Buy)
- Coal India’s (COAL) 2QFY18 revenue grew ~12% YoY to INR181b (3% miss) on ~13% growth in offtake. Volume mix was better on higher e-auction volumes (23mt v/s estimate of 21mt); the revenue miss was on account of lower-than-expected uptick in e-auction realization* (INR1,614 v/s estimate of INR1,700) and reversals* pertaining to 1Q in washed coal (INR2,582 v/s estimate of INR3,200). FSA realization declined 5% YoY to INR1,224 (in line).
- EBITDA (ex-OBR) increased 46% YoY to INR12.9b, albeit off a low base. The reported numbers were also impacted by employee wage negotiation provision (~INR23b). The provision is ad-hoc pending final implementation of the negotiation agreement. There was also de-stocking of some high cost inventories, driving increase in reported expenses.
- PAT declined ~38% YoY to INR3.7b on lower other income (down 57% YoY to INR6.1b) and higher tax rate.
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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