Buy Coal India; target of Rs 424: SPA Research

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26 Aug, 2025 12:21

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SPA Research is bullish on Coal India and has recommended buy rating on the stock with a target of Rs 424 in its February 18, 2013 research report.
 
“Coal India reported net sales of INR 173.25 bn, up by 13 percent YoY. EBITDA/tn increased sequentially by INR 82 to INR 364 in Q3FY13 (INR 414.13 in Q3FY12) basically on the back of increase in volumes by 11 percent YoY at 117.37 mn tn. We retain our "BUY" recommendation on the stock with a target of INR 424.”
 
“CIL reported Q3FY13 consolidated net sales at INR 173.25 bn, up by 13 percent YoY & by 18.8 percent QoQ. This was led by volume offtake of 120.45 mn tons in Q3FY13, up by 9.23 percent YoY & by 15.37 percent QoQ. Average realizations remained flat at INR 1438/ tn, up 0.09 percent QoQ and 3.05 percent YoY. Volume growth was driven by inventory liquidation of ~ 3.08 mn tons in Q3FY13. EBITDA margin contracted 492 bps YoY to 24.75 percent, led by high employee, power and fuel expense. EBITDA/tn stood at INR 365.3 in Q3FY13 vis-à-vis INR 414 in Q3FY12 & INR 282 in the sequential quarter. This was mainly due to high employee expenses which increased by 12.33 percent to INR 537.18/tn YoY. PAT margin expanded 908 bps YoY to 16.89 percent (14.83 percent QoQ) aided by a sharp decline in depreciation expense (down by 24.21 percent YoY).”
 
“CIL's production in 9MFY13 stood at 308.91 mn tn, up by 6.06 percent YoY, while off-take at 335.23 mn tn was up by 8.05 percent YoY. Transportation infrastructure has been improving for the company, as rake availability was 177 rakes a day in 9MFY13, up by 10.62 percent YoY. The share of railways (transports ~1.5 mn tons of coal everyday) in the transportation mix is ~ 52 percent and is expected to rise to 58 percent by FY17. On the back of increased coal production, higher FSA realisations, intact e-auction volumes, increased availability of rakes and FSA issue about to resolve, we expect CIL's revenue & net profit to register a growth of 7 percent & 12 percent respectively over FY13-FY14E. We retain our "BUY" recommendation on the stock with a target of INR 424 based on FCFE valuation approach,” says SPA Research report.

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