Hold Coal India; target of Rs 360: R K Global

62884 Investors following Coal India. Share this News with them.

0

Like this story, share it with millions of investors on M3

Hold Coal India; target of Rs 360: R K Global

R K Global has recommended hold rating on Coal India with a target of Rs 360, in its February 15, 2012 research report.

Post your opinion here

 

0

Tweet

Share on Tumblr

RELATED NEWS Hold BPCL; target of Rs 723: SPA Research Accumulate BPCL; target of Rs 655: Emkay Accumulate Oil India; target of Rs 1525: PLilladher ALSO READ See previous views by R K Global See what other Experts & Brokerages are saying about Coal India See messages about Coal India Coal India BSE | NSE 01/06/12 Are Mutual Funds betting on Coal India?

R K Global has recommended hold rating on Coal India with a target of Rs 360, in its February 15, 2012 research report.

"Coal India revenue grew sluggish below our expectation; however profitability in line with expectation. It reported ~21%Y-o-Y revenue growth to Rs153492mn (our estimate Rs194804mn) along with profitability growth by 54%Y-o-Y to Rs40377mn (our estimate Rs41916mn) during the quarter."

"During the quarter the company's production grew marginally by 0.7%Y-o-Y to 114.6mn ton compared to 113.7mn ton in Q3FY11. Production was also impacted due to a day's strike on account of bonus negotiation. Further, offtake also declined by 0.1% to 110.3mn ton compared to 110.4mn ton in previous year. This led revenue to grow only by 21%Y-o-Y to Rs153492mn (below our estimate of Rs194804mn) in Q3FY12 compared to Rs126867mn in Q3FY11 despite the volume growth and price hike in February last year. Total expenditure declined by 3.8%Y-o-Y as a percentage of sales to Rs108071mn in Q3FY12 (below our estimate at Rs144074mn) led EBITDA to grow by 33.6%Y-o-Y to Rs45421mn in Q3FY12 (our estimate of Rs50729mn) compared to Rs33990mn in Q3FY'11. Operational efficiency of the company improved as the company saw sharp fall in its expenditure cost as a percentage of sales like raw material cost (-16%), General & Administrative expense (-14.3%) and O&M expense (-14.2%) partially offset the increase in miscellaneous expenses(18%). Despite steady offtake, the company managed to improve its margins with low operational cost and price hike. Profitability grew by 54%Y-o-Y to Rs40377mn (our estimate at Rs41916mn) in Q3FY12 compared to Rs26260mn in Q3FY11. EBITDAM and PATM too improved by 1000bps and 2730bps to 29% and 26% respectively (above our expectation of 26% and 22%)   Coal India plans to pay Rs56847mn as dividend to the government in 2011-12 more than double the amount paid last fiscal."

"At CMP of Rs334, the stock is trading at EV/EBITDA of 11x on FY14E EBITDA Rs186256mn. We maintain our earlier stance and valued CIL based on DCF, assuming risk free rate of 9%, beta of 0.58. We have used FY12-14 as explicit period for our forecast. Assuming cost of equity at 12.7% and terminal growth rate of 5.2% on the future cash flows, we arrive at an intrinsic value of Rs360/share. At our target price, the stock offer upside potential of ~8%; we recommend to "Hold" the stock," says R K Global research report.    

FIIs holding more than 30% in Indian cos   

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

To read the full report click on the attachment