Hold Coal India; target of Rs 150: ICICI Direct

ICICI Direct's research report on Coal India

Coal India (CIL) reported an operationally steady set of Q1FY21 numbers. For the quarter, topline came in lower than our estimate while EBITDA and PAT came in higher than our estimate. CIL reported sales volumes of 120 million tonne (MT), down 22% YoY, 27% QoQ. Total operating income was at Rs 18486.8 crore (down 26% YoY, 33% QoQ), lower than our estimate of Rs 19986.8 crore. EBITDA came in at Rs 3051.7 crore (down 54% YoY, 55% QoQ) but higher than our estimate of Rs 2098.6 crore. EBITDA margin was at 16.5% (26.5% in Q1FY20, 24.4% in Q4FY20), higher than our estimate of 10.5%. Ensuing PAT came in at Rs 2077.5 crore (down 55% both QoQ, YoY) but higher than our estimate of 1439.4 crore.

Outlook

CIL reported an operationally steady Q1FY21 performance. Going forward, we model sales volume of 550 MT for FY21E and 575 MT for FY22E. Furthermore, we expect EBITDA margins to hover at ~18% over the next couple of years. We value the stock at 5x FY22E adjusted EV/EBITDA and arrive at a target price of Rs 150. We maintain our HOLD recommendation.

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