Buy Coal India; target of Rs 210: Edelweiss Securities

Edelweiss Securities' report on Coal India

Coal India (CIL) sustained a firm operating performance in Nov-21. Key points: i) Production at 1.79mt/day is the highest ever in FY22. ii) SECL’s operating performance improved. iii) Offtake rose further to 1.89mt/day. Taking cognisance of year to Nov-21 performance, we expect our offtake estimate of 643mt (up 12% YoY) to be met easily. Going ahead, we expect higher e-auction volume/price premium and robust demand to drive performance. Furthermore, pit-head inventory at 29mt is significantly lower than Mar-21 levels.

Outlook

We believe significant cash accretion through Mar-22 would result in a dividend yield of 12–13%. Maintain ‘BUY’ on CIL with an unchanged TP of INR210/share at 9x FY23E EPS.