MOSL: COAL INDIA (Buy)-October 2017-Dispatch growth remains strong-Domestic shortage driving e-auction prices
​Coal India: October 2017: Dispatch growth remains strong; Domestic shortage driving e-auction prices
(COAL IN, Mkt Cap USD27.5b, CMP INR292, TP INR335, 15% Upside, Buy)
Dispatches grew ~12% YoY in October, likely to exceed full-year estimate
- ​Coal India's (COAL) dispatch growth remains strong, as it grew 12.2% YoY to 48.3mt in October 2017. YTD 7MFY18 dispatches are up 8.7% YoY (to 317mt), and are set to exceed our estimate of +6.8% growth for FY18. Coal inventories at power plants remain at critical levels (just ~6 days of consumption), which provides visibility of strong growth ahead.
- Production grew 6% YoY to 46.1mt. YTD 7MFY18 production increased 1.7% YoY to ~278mt.
- CCL, NCL and WCL delivered strong double-digit growth in dispatches. BCCL and ECL saw a decline, while MCL continues to struggle.
E-auction at INR2,397/t in September
- ​E-auction realization was healthy at INR2,397/t (-6% MoM) in September, but with some loss of volumes. Allocated quantity of ~5.7mt (+37% YoY/54% QoQ) was below the required annual run-rate (of ~110mt). Net benefit, however, should still be positive for COAL.
- Premium over notified prices at INR774/t was the highest since January 2015 due to domestic shortage.
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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