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Accumulate Coal India; target Rs 343: Angel Broking

Brokerage house Angel Broking is bullish on Coal India (CIL) and has recommended 'Accumulate' rating on the stock with a price target of Rs 343 in its research report dated May 30, 2013.

June 01, 2013 / 17:46 IST
     
     
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    Angel Broking's research report on Coal India"Coal India (CIL)'s 4QFY2013 net sales grew by 2.5 percent yoy to Rs 19,905cr due to higher volumes. Sales volumes stood at 130mn tonne, indicating the company's focus on increasing offtake. Realizations were however flat yoy but grew 6.4 percent qoq to Rs 1,531/tonne. Lower staff costs and social overheads boost EBITDA: The company's EBITDA increased by 19.6 percent yoy to Rs 7,490cr, mainly due to lower employee costs and social overheads. However, the other income declined by 5.2 percent yoy to Rs 2,207cr and the tax rate also jumped to 28.0 percent in 4QFY2013 compared to 22.5 percent in 4QFY2012. Hence the adjusted net profit declined by 8.9 percent yoy to Rs 5,436cr (above our estimate of Rs 4,376cr)."


    "Outlook and valuation: CIL's stock price has underperformed over the past one year on news flows related to further divestment in CIL by the government. However, CIL has demonstrated strong pricing power by increasing prices of coal to offset rising costs (including price hike taken in 4QFY2013). On the price pooling front, we expect the same to be revenue-neutral for CIL in case it imports coal to meet the demand of power producers. Hence, valuing the stock at 6.5x FY2015E EV/EBITDA, we derive a target price of Rs 343 and maintain our Accumulate rating on the stock," says Angel Broking 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.

    first published: Jun 1, 2013 05:46 pm

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