Buy Coal India; target of Rs 480: Motilal Oswal

Motilal Oswal's research report on Coal India

Coal India (COAL)’s 3QFY25 revenue came in at INR358b (YoY/QoQ: -1%/ +17%), in line with our estimate of INR367b, primarily led by strong volumes (YoY/QoQ: +2%/+15%). Adj. EBITDA (excl. OBR costs) stood at INR104b (YoY/QoQ: -13%/+45%) in line with our est. of INR104b. EBITDA/t came in at INR536 (YoY/QoQ: -14%/+26%). APAT came in at INR85b (YoY/QoQ: -17%/+35%) against our estimate of INR84b. APAT was supported by higher-than-expected other income. During 9MFY25, revenue declined 2% YoY, adj. EBITDA dipped 9% YoY, and APAT declined 11% YoY. Production for 3QFY25 was 202mt (YoY/QoQ: +2%/+33%). The sequential spike in production was fueled by a low 2QFY25 base, which was hit by heavy monsoons. Offtake/sales stood at 194mt (YoY/QoQ: +2%/+15%). Blended ASP came in at INR1,667/t (-3% YoY/+3% QoQ) for the quarter. It reported an FSA revenue of INR259b (YoY/QoQ: -2%/+19%) with volumes of 171mt (YoY/QoQ: -1%/+15%) and ASP of INR1,514/t (YoY/QoQ:-1%/+4%). The e-auction revenue was INR51b (YoY/QoQ: -2% / +38%), and volume stood at 19mt. The realization came in at INR2,671/t translating to a 76% premium. The Board declared an interim dividend of INR5.60 per share, totaling INR21.35 per share as of 9MFY25.

Outlook

At CMP, the stock is trading at 3.3x FY27E EV/EBITDA. We reiterate our BUY rating with a TP of INR480 (premised on 4.5x on FY27 EV/EBITDA). COAL remains our top pick in the metals and mining sector.