Nov 13, 2012, 05.14 PM | Source: Moneycontrol.com
R K Global has recommended hold rating on Coal India with target of Rs 378 in its November 2012 research report.
, R K Global |
“Coal India revenue in line with the expectation at Rs145725 (expected Rs146850mn) compared to Rs131481mn of corresponding Q. Improvement in production and offtake volumes supported the revenue growth. NPAT reported well than the expected at Rs30673mn (expected Rs26192mn). Improvement in the exceptional items and lower interest as well as depreciation cost led profitability to escalate.”
“During the Q, the company net sales has increased 10.8% YoY to Rs145725mn (expected Rs146850mn) compared to Rs131481mn of the corresponding Q of previous year. This was due to the improved production number as the company output increased 10.9% YoY to 89mn ton compared to 80mn ton of the corresponding Q. The revenue would have been much better but due to fall in the e-auction prices by Rs153/ton to Rs2282/ton as against Rs2435/ton of FY12. The company off take has also gone up 8.5% YoY to 101mn ton in Q2FY13 compared to 93.7mn ton of the corresponding Q of previous year. On the profitability front, EBITDA increased 15%YoY to Rs28617mn in Q2FY13 compared to Rs24896mn of the corresponding Q of previous year. Other income of the company has gone up 17%YoY to Rs20929 mn in Q2FY13 compared to Rs17865mn of the corresponding Q.”
“We still maintain our positive outlook on the company as the country’s demand for coal is expected to continue to increase and the new GCV based pricing will increase the credibility towards the company. At CMP of Rs347, the stock is trading at EV/EBITDA of 13x on FY14E EBITDA Rs174233mn. We valued CIL based on DCF, assuming risk free rate of 8%, beta of 0.58. We have used FY12-14 as explicit period for our forecast. Assuming cost of equity at 10.23% and terminal growth rate of 5.86% on the future cash flows, we arrive at an intrinsic value of Rs378/share. At our target price, the stock offer upside potential of ~9%; we recommend to “hold” the stock,” says R K Global research report.
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