MOSL: COAL INDIA (Buy)-Price hike offsetting grade slippage-Maintain Buy
​Coal India: Price hike offsetting grade slippage; Maintain Buy
(COAL IN, Mkt Cap USD25.8b, CMP INR268, TP INR316, 18% Upside, Buy)
- Coal India's (COAL) 4QFY17 EBITDA (ex-OBR) declined 34% YoY to INR41.2b, below estimate of INR50.6b, due to higher provision and other expenses. Other income rose 22% YoY to INR26b, despite ~35% decline in cash balance. PAT was down 36% YoY to INR27.2b (est. of INR33b). For FY17, EBITDA (ex-OBR)/PAT were down ~35% YoY to INR123b/INR93b.
- Price hike offsetting grade slippage: FSA realization increased 2% YoY to INR1,376/t as the price hike of 6-7% in May 2016 and the effective price hike of 4-5% at BCCL/CCL in January 2017 are offsetting the impact of grade slippage. FSA volumes declined 3% YoY to 116mt.
- E-auction realization weak: E-auction realization declined 2% YoY to INR1,611/t (est. of INR1,719), probably due to phasing of deliveries under low-priced special e-auction. E-auction volumes were up 45% YoY to 29mt (19% share). Washed coal realization increased 69% YoY to INR3,927/t.
- Cost higher: Pay revision (COAL factoring ~12-15% hike), provisioning and higher other expenses drove a 21% YoY increase in cost per ton (ex-OBR) to INR1,208. Avg. realization was up 4% YoY to INR1,480/t, while EBITDA (ex-OBR) was down 36% YoY to INR272/t.
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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