Motilal Oswal - MOSL: Morning India (11/September/17)-1. Coal India-2. Dr Reddyâ€™s Labs

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Motilal Oswal

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MOSL: Morning India (11/September/17)-1. Coal India-2. Dr Reddyâ€™s Labs

â€‹MOrning India (11/September/17): 1. Coal India; 2. Dr Reddyâ€™s Labs

Todayâ€™s top research idea

Coal India: Cost saving and other operating income driving upgrades
â€‹Headwinds facing Coal India in the form of grade correction, a fall in e-auction prices, weak demand/de-stocking and wage hike provision are now largely behind, in our view.
1QFY18 fully reflects the impact of grade correction, while demand has improved (+6.6% in 5MFY18 v/s +1.6% in FY17) and e-auction prices are higher. Wage negotiations are in the advance stage, but likely to be concluded within our estimate of ~18%. Gradual closing of underground mines - employing ~55% of manpower but accounting for just ~6% of production - will drive cost savings. Hike in sizing and other charges, and a likely increase in transportation charges will offset the loss due to grade correction.
We expect adj. EBITDA/PAT CAGR of 18%/21% over FY17-19E. Valuations are attractive at 5.9x FY19E EV/EBITDA and dividend yield of 6.5%. Reiterate Buy with a TP of INR305.

11/09/2017 20 EN

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MOSL: Morning India (11/September/17)-1. Coal India-2. Dr Reddyâ€™s Labs

MOSL : HOME FIRST FINANCE COMPANY: Earnings in-line with sustained improvement in asset quality

MOSL : SHOPPERS STOP: Ticking the right boxes

MOSL : ERIS LIFESCIENCES: Enhanced efforts toward product launch-related activities

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