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Coal India on fire after Q1 profit rises 178% YoY: Should you add more?

Shares of Coal India have posted a nearly three-fold rise in net profit, taking the shares to a fresh 52-week high. Top brokerages believe the demand for coal here to stay.

August 11, 2022 / 09:54 AM IST
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Coal India share price touched 52-week high of Rs 226.10 in the early trade on August 11, after the world's largest coal miner reported record numbers for the quarter ended June 2022. A global energy crunch has propped up prices of coal the world over, which in turn has helped its first quarter numbers.

Coal India on August 10 reported consolidated net profit at Rs 8,834.22 crore for the quarter ended June, up 178.31 percent compared to Rs 3,174.15 crore in the same quarter last year.

Revenue from operations came in at Rs 35,092.17 crore, rising 38.79 percent from Rs 25,282.75 crore in the year-ago quarter.

The company said raw coal production was at 159.75 million tonnes during the quarter, up from 123.98 million tonnes in the comparable quarter.

Offtake of raw coal was at 177.49 million tonnes, compared to 160.44 million tonnes in the year ago quarter.

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Top brokerages are bullish on the company's shares after the June quarter earnings.

CLSA

Brokerage and investment group CLSA has maintained Buy rating on COal India, and raised the target price to Rs 250 from Rs 205 per share.

Q1FY23 was above estimates on better realisations with focus on wage negotiations, a CLSA note said. It added that the EBITDA for first quarter was meaningfully above estimates, driven by better realisation.

The company commands a highest-ever premium of 200 per cent to Fuel Supply Agreements (FSAs), while wage negotiation & FSA price hikes were key to outperformance.

CLSA expect e-auction realisations to soften in H2FY23, however returns from diversification into newer businesses will be closely watched, CNBC-TV18 quoted citing the report.

Jefferies

Foreign broking house Jefferies has kept a Hold rating on the stock with a target at Rs 175 per share.

The cash EBITDA was up 2 percent QoQ & 45 percent above our estimate, said Jefferies.

The Q1FY23 dispatch volumes fell a slight 1 per cent QoQ, but blended ASP rose 10 per cent QoQ, reported CNBC-TV18.

Prabhudas Lilladher

Coal India posted back to back strong set of earnings for 1QFY23 on back of strong realisations in FSA (despite reduced volumes to non-power sector) and e-auction. Reported EBITDA grew 153%/35% YoY/QoQ to Rs 12,250 crore, ahead of our/consensus estimates (CE) of Rs 8,140 cr/Rs 8,250 cr.

The company displayed strong offtake and FSA realisations over last one year. Delay in increase of FSA prices (85% total volumes) were more than offset by better coal grade management (resulting in higher FSA realisations) and strong e-auction realisations in wake of robust global prices.

We increase our FY23e/FY24e EBITDA estimates of COAL by 18%/12% on account of higher FSA and E-auction realisations. Maintain Accumulate rating with revised Target Price of Rs 255 (earlier Rs 220) based on EV/EBITDA of 2.5x FY24e.

At 09:45 hrs, Coal India shares were quoting at around Rs 222, up nearly a per cent on BSE.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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first published: Aug 11, 2022 09:54 am
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