Dolat Capital is bullish on Coal India and has recommended accumulate rating on the stock with a target price of Rs 382 in its February 14, 2013 research report.
"Coal India result were above estimates primarily due to higher other income. Higher e-acution realizations (28.9%QoQ/3.1%YoY) were not able to compensate increase in cost leading to EBITDA of Rs 42.88bn (DCe: Rs 44.88bn). CIL has maintained strong momentum of dispatches which have grown by 2.4%YoY and 9.4% respectively. CIL will surpass our dispatch target of 460mn tonne and will able to achieve dispatches of 464 mn tonne on strong availability of rakes. We believe CIL would have to take a price hike of 4-5% given the increase in cost due to increase in diesel prices which should be possible given the steep discount and strong operational performance. We continue to maintain our Accumulate rating on the stock with a price target of Rs 382 (11xFY14 core EPS+cash of Rs 140 per share) Dispatches and production rose 9.2%YoY and 2.4%YoY to 120.450mn tones and 117.4mn tonnes respectively. FSA dispatch quantity increased by 12.7%YoY to 105.6 mn tonnes whereas E Auction quantity declined by 8.7%YoY to 10.5 mn tonnes. E Auction sales were 8.7% of the total sales quantity in Q3FY13 (vs dolat estimates of 9.8% of sales). Blended realizations were up 3.3%YoY to Rs 1439 per tonne higher than our estimates of Rs 1400 per tonne due to higher e auction realisations. The realizations for FSA coal have increased by 6%YoY to Rs 1232 per tonne (DCe: Rs 1250per tonne). Hihger e auction realizations of Rs 2941 per tonne (DCe: Rs 2700 per tonne) was a key positive surprise. Coal India cited the lower forward e auction sales for the sharp jump in realizations. Washed coal realizations increased by 19.5%YoY to Rs 2495 per tonne on back of higher grade. Net sales increased by 12.9%YoY to Rs 173.25bn (DCe: Rs 168.09bn). Employee cost at Rs 63.05bn (up by 12%YoY) though surprised us on the positive side and was lower than our est of Rs 65bn. Cost per tonne for CIL increased by 10%YoY to Rs 1082per tonne (DCe Rs 1050 per tonne) due to increase in welfare, contractual and misceelaneous expenses. EBITDA margins slipped by 480bps YoY to 24.8% due to higher employee cost and other cost. Accumulate the stock with a target price of Rs 382," says Dolat Capital research report. 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 attachmentDiscover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!