ICICI Direct recommended hold rating on Coal India with a target price of Rs 225 in its research report dated August 14, 2019.
ICICI Direct's research report on Coal India
Coal India (CIL) reported healthy operational performance for Q1FY20 wherein EBITDA and PAT came in higher than our estimate. CIL reported a sales volume of 153 million tonne (MT) (nearly flattish YoY but down 6% QoQ). FSA sales volume came in at 130 MT while FSA realisations during the quarter was at Rs 1370/tonne (up 4.4% YoY, higher than our estimate of Rs 1360/tonne). E-auction volumes came in at 19.1 MT while e-auction realisations were at Rs 2155/tonne. The company reported a total operating income of Rs 24939 crore up 3% YoY (our estimate of Rs 25,587 crore). EBITDA came in at Rs 6612 crore, up 15% YoY (our estimate of Rs 6052 crore). EBITDA/tonne was at Rs 431 /tonne (our estimate of Rs 395/tonne). The ensuing PAT came in at Rs 4629 crore, up 22%YoY (our estimate of Rs 4395 crore).
Going forward, we value the stock at 5x FY21E EV/EBITDA (downward revised from 5.5x earlier on the back of flattish trend witnessed in production and off take volume) and arrive at a target price of Rs 225. We maintain our HOLD recommendation.
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