Coal India Q4 PAT seen up 42% at Rs 3734 cr

Coal India is to announce its fourth quarter results. According to CNBC-TV18's estimates, Q4FY11 sales are seen up 14% at Rs 14430 crore versus Rs 12692 crore, quarter-on-quarter, (q-o-q).

Its EBITDA is seen up 41% at Rs 4768 crore versus Rs 3375 crore.

Its EBITDA margin is seen at 33% versus 27%.

The company's PAT is seen up 42% at Rs 3734 crore versus Rs 2626 crore.

(Note that historical quarterly financials are not available for prior periods and hence there is limited information on seasonality of costs and profits on a quarterly basis)

Factors at Play:

Dispatches may increase 5% QoQ (company says dispatches up 8.8% y-o-y)  and realizations to increase 6.2% QoQ

Company increased coal prices of Grade A & Grade B coal by 30% on Feb 27, 2011

Price increase is partly to offset cost increases (~10% YoY) given increased staff costs (Dearness allowance increased by 50%) and other costs.

Employees Wages and Benefits in FY11Q3 at Rs 4500 crore, should come in much higher

Global coal prices have increased 20%+ since 3QFY11, and could lead to improved realizations for e-auctions.

Have 70 million tonne of coal stocks that we had at the end of previous fiscal.

70 million tonne of coal stock translates to nearly 1/6th of our production merely 2 months production which is undesirable.

There is an issue of movement of coal from the pithead to the consuming centers.

Have been able to liquidate 4.5 million tonne of coal from stocks recently

Production:

Coal India reported flat production of 431mt for FY11(unchanged YoY)

Down 6.5% from its target driven by project delays and infrastructure constraints.

Production in FY11 was estimated at approx 440m tons

Raised selling prices to selective customers in Q4 FY11 to offset lower production.

The new pricing mechanism would offer more exposure to the spot coal market

Expect spot-based sales volumes to rise to 23% in FY12 from 16% in FY11.

Production target for FY12 at 452mt

Further Price Hike on cards:

Co may raise price of coal from July 1, 2011

To increase prices to offset wage hike

To decide on price hike by end of June

Company to decide on another price hike post wage increase which may Increase wages by 30% In FY12

To accommodate the proposed proposed mining bill

Total Wage Bill Increase At 32% In FY11

Indian Railways:

Indian Railways have increased the availability of rakes.

In April 2010 the average rakes availability was 158 per day and this year April it has been 180 per day, which is about 22 rakes per day availability increase.

Hoping this trend continues as it will help in liquidating stock