Buy Coal India; target of Rs 390: Pabhudas Lilladher

Pabhudas Lilladher is bullish on Coal India and has recommended buy rating on the stock with a target of Rs 390 in its August 13, 2012 research report.

"Coal India (CIL) reported Q1FY13 earnings marginally below our expectation on account of lower-than-expected realizations in E-auction. However, expansion in FSA realizations (would be further boosted by increase in WCL prices) and low employee cost in the quarter reinforces our positive outlook for earnings in coming quarters. This would more than offset the weakness in E-auction, partially driven by seasonal fall in grades. We maintain our ‘BUY’ rating with TP of Rs390, 12.5x FY13E core EPS,"

"Revenue grew 14% (PLe:17%) YoY atRs165bn (PLe: Rs169.5bn) on the back of 6.4% growth in volumes at 113mtonnes (t) and 7% (PLe: 10%) rise in realisations at Rs1,465 (PLe:Rs1503)/t. The variance was primarily on account of lower-than-expected realizations in Eauction at Rs2, 561 (PLe:2,850)/t, partially off-set by better realizations in FSA at Rs1,267 (PLe: Rs1,250). Total cost/t grew 13.6% to Rs 1,037, below our expectation of Rs1,059, primarily on account of lower-than expected employee cost at Rs61.3bn (PLe: Rs65bn). This aided the company in narrowing the miss on realizations. Management expects employee cost to be in the range of Rs250-260bn against its earlier guided range of Rs260-270bn,"

"Led by below expectation realizations, CIL reported EBITDA below our expectation at Rs48.1bn (PLe: Rs50bn, +4%), flat YoY. EBITDA/t for the quarter fell 6% to Rs427 (PLe: Rs445).PAT grew by 8.3% to Rs44.8bn onthe back of 32% rise in other income and 100bps fall in tax rate at 29.4%. PAT stood marginally below our expectation of Rs46.4bn; however, ahead of consensus estimate of Rs41.7bn," says Pabhudas Lilladher research report.

Bodies Corporate holding more than 50% 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

Read More