Buy Coal India; target of Rs 338: Firstcall Research

Firstcall Research report on Coal India

“Coal India Limited (CIL) as an organized state owned coal mining corporate came into being in November 1975 with the government taking over private coal mines. With a modest production of 79 Million Tonnes (MTs) at the year of its inception CIL today is the single largest coal producer in the world. Operating through 81 mining areas CIL is an apex body with 7 wholly owned coal producing subsidiaries and 1 mine planning and consultancy company spread over 8 provincial states of India. CIL also fully owns a mining company in Mozambique christened as 'Coal India Africana Limitada'. CIL also manages 200 other establishments like workshops, hospitals etc. Further, it also owns 26 technical & management training institutes and 102 Vocational Training Institutes Centres. Indian Institute of Coal Management (IICM) as a state-of-the-art Management Training 'Centre of Excellence' - the largest Corporate Training Institute in India - operates under CIL and conducts multi disciplinary management development programmes. CIL having fulfilled the financial and other prerequisites was granted the Maharatna recognition in April 2011. It is a privileged status conferred by Government of India to select state owned enterprises in order to empower them to expand their operations and emerge as global giants. So far, the select club has only five members out of 217 Central Public Sector Enterprises in the country.” “Coal India Limited, together with its subsidiaries, engages in the production of coal in India, reported its financial results for the quarter and year ended 31st March, 2013. The company’s net profit jumps to Rs.23206.10 million against Rs.12235.20 million in the corresponding quarter ending of previous year, an increase of 89.67 percent. Revenue for the quarter declines by 21.14 percent to Rs.1219.30 million from Rs.1546.20 million, when compared with the prior year period. Reported earnings per share of the company stood at Rs.3.67 a share during the quarter, registering at 89.67 percent increase over previous year period. Profit before interest, depreciation and tax is Rs.26775.20 millions as against Rs.15775.10 millions in the corresponding period of the previous year.” “At the current market price of Rs 307, the stock P/E ratio is at 17.66 x FY14E and 15.71 x FY15E respectively. Earning per share (EPS) of the company for the earnings for FY14E and FY15E is seen at Rs.17.38 and Rs.19.54 respectively. Operating Profit and PAT of the company are expected to grow at a CAGR of 15 percent and 15 percent over 2012 to 2015E respectively. On the basis of EV/EBITDA, the stock trades at 14.24 x for FY14E and 12.79 x for FY15E. Price to Book Value of the stock is expected to be at 8.96 x and 8.48 x respectively for FY14E and FY15E. We recommend ‘BUY’ in this particular scrip with a target price of Rs 338 for medium to long term Investment,” says Firstcall 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.

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