Motilal Oswal has come out with its first quarter (April-June) earnings estimates for the ulilities sector. The brokerage house expects Coal India to report a 0.6 percent growth quarter-on-quarter (growth of 5.9 percent year-on-year) in net profit at Rs 4254.2 crore.
Sales are expected to decrease by 8.7 percent Q-o-Q (up 6.5 percent Y-o-Y) to Rs 18960.7 crore, according to Motilal Oswal.
Earnings before interest, tax, depreciation and amortisation (EBITDA) are likely to fall by 12.1 percent Q-o-Q (up 10.8 percent Y-o-Y) to Rs 4743.7 crore.
Motilal Oswal's Report on Coal India:
We expect revenue of INR190b (up 6.5 percent YoY) and EBITDA of INR47.4b (up 11 percent YoY). Higher realisations for e-auction volumes and better cost absorption would lead EBITDA improvement. Reported PAT is likely to be INR425b, up 6 percent YoY.
Production during the quarter grew 12 percent YoY to 121.3mt and dispatches increased 8.3 percent YoY to 129.5mt. We estimate e-auction volumes at 17m tonne for the quarter. The Ministry of Coal’s monthly review indicates substantial jump in the quantity offered. This may impact the price of e-auction coal, which has risen in the last 2-3 quarters owing to constrained supply. E-auction revenue is a key monitorable.
MoC has announced the auction of linkages to non-power sector, which would be the key revenue driver for Coal India in FY17E.
We expect Coal India to report consolidated PAT of INR153b for FY16E (up 11 percent YoY) and INR180b for FY17E (up 17 percent YoY). The stock trades at 14.8x FY17E earnings.
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