Accumulate Coal India; target of Rs 368: Angel Broking

Angel Broking is bullish on Coal India and has recommended accumulate rating on the stock with a target of Rs 368 in its November 09, 2012 research report.

“Coal India’s (CIL) 2QFY2013 results have come in lower than our estimates on account of lower-than-expected realizations on e-auction sales. Nevertheless, we recommend Accumulate on the stock.”
“CIL’s 2QFY2013 net sales increased 10.8% yoy to Rs14,573cr (below our estimate of Rs15,832cr) due to increases in both volumes as well as average realization. However, its realizations were lower than expected due to lower-than-expected e-auction realizations. Blended average realization on coal sales increased 2.3% yoy to Rs1,434/tonne and sales volumes grew by 8.4% yoy to 102mn tonne. CIL’s sales volumes have increased 7.0% yoy to 215mn tonne in 1HFY2013. Despite a 10.8% yoy growth in net sales, CIL’s EBITDA grew by only 1.4% yoy to Rs2,787cr due to increase in staff costs which increased by14.9% yoy to Rs6,536cr and overburden removal expenses which increased by 54.5% yoy to Rs674cr. Nevertheless, a 16.6% yoy growth in other income to Rs2,093cr resulted in the adjusted net income growing by 18.6% yoy to Rs3,069cr.”
“CIL’s 2QFY2013 net profit growth was driven by higher realizations and other income. CIL remains well-poised to meet its FY2013 offtake target with 7.5% yoy increase reported in 1HFY2013. Moreover, an increase in blended realization due to shifting to GCV-based pricing is expected to offset the rise in staff costs in FY2013. Valuing the stock at 8.0x FY2014 EV/EBITDA, we derive a target price of Rs368 and recommend Accumulate on the stock,” says Angel Broking research report. Public holding more than 90% 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

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