Motilal Oswal's research report on Coal India
COAL has offered to re-open 20 previously closed/abandoned mines in partnership with the private sector. The methodology is the same as commercial mining. The mines will be auctioned on a revenue sharing basis. The highest bidder can mine using green mining technology and can sell the coal at market prices under a transparent mechanism. Related-party transactions are not allowed. The objective is to offer mines that are not commercially viable for COAL, but can be mined by the private sector. This will help reduce the coal deficit in India, which as per the Ministry of Coal is currently pegged ~25MT. If successful, COAL will offer an additional 100 mines.
This initiative will not lead to a change in our estimates for COAL for FY23/24, but the narrative of incremental earnings in the future is positive. We maintain Buy rating with an unchanged TP of INR220 based on 4x FY23E EV/EBITDA.
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