Motilal Oswal is bullish on Coal India has recommended buy rating on the stock with a target price of Rs 338 in its research report dated February 12, 2019.
Motilal Oswal's research report on Coal India
Revenues increased 16% YoY to ~INR250b, as against our est. of INR239b, led by (a) FSA realization increase of ~13% to INR1,334/t, as against our est. of INR1,310/t, (b) e-auction realization increase of 43% (10% QoQ) to INR2,847/t, as against our est. of INR2,500/t, and (c) volume increase of ~2% to 154.1mt (volume mix was weak). Cash cost (ex-OBR) was flat YoY at INR1,001/t. Adj. EBITDA (ex-OBR) increased 44% YoY to ~INR79b, driven by higher realization and flattish cost. There is a change in accounting of provisions from gross to net basis. The provisions have decreased with corresponding decrease in revenue and other income. 1QFY19 and 2QFY19 financials have also been restated, which boosted EBITDA, but with no impact on PAT. PAT increased 52% YoY to INR45.6b, beating our est. of INR35.7b, driven by better-than-expected FSA realization and lower cost.
The stock trades attractively at ~4x FY20E EV/adj. EBITDA. We value the stock on 6.5x FY20E EV/EBITDA at INR338/sh. Maintain Buy.
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