Poll: What to expect from Coal India in first quarter

Coal India, country's largest coal mining company is set to declare its first quarter results of financial year 2012-13. Analysts on an average expected profit after tax to grow by 5.5% year-on-year and 8.9% quarter-on-quarter to Rs 4,372 crore.

PAT will also get support from other income, which contributes more than 50% of total PAT. Higher yields on its cash & cash equivalent balance of approximately Rs 55,000 crore will support profits. Net sales are seen going up by 16% YoY to Rs 16,762.4 crore during the same period, but QoQ the same is likely to fall by 13.7%. Earnings before interest, tax, depreciation and amortisation (EBITDA) are expected to go down by 1% YoY to Rs 4,790 crore in the quarter ended June 2012, but the same is seen rising by 26.5% QoQ. EBITDA margin is likely to decline 460 basis points YoY to 28.6%, but that is seen increasing significantly QoQ from 19.5%. Production and dispatches: In the June quarter, production increased 6% YoY to 102.5 mt and dispatches are expected to rise by 7% YoY to 114 mt. Coal India’s offtake is expected to increase on the back of higher output and increase in availability of rakes. Inventory liquidation is always higher in first half of financial year, so that needs to be closely watched as they have indicated liquidation of 16 mt in April-July. Topline will be supported by price hikes at its two subsidiaries (Western Coalfields (ECL) and Western Coalfields (WCL)): ECL and WCL together constituted 17% (that is 74 mt) of its total production in FY12. Analysts expect a sequential decline in blended realizations to factor drop in e-auction realisations during Q1. E-auction sales volume is expected to decline QoQ as the company’s focus was to supply coal to the power producers Margin compression by 300 basis points is expected due to wage hikes. Employee cost is likely to be higher by 27% YoY: Employee cost per tonne is expected to rise on account of wage revision and higher variable costs. Employee cost is likely to be in the vicinity of Rs 6200-Rs 6500 crore in the quarter. In Q4FY12, total employee costs stood at Rs 9068.8 crore Analysts feel an overhang over new fuel supply agreements (FSAs) continues to pressurize the stock. FSAs will be cleared at a meeting on August 13.