Hold Coal India; target of Rs 225: ICICI Direct

ICICI Direct's research report on Coal India

Coal India reported a healthy set of Q3FY19 numbers albeit lower e-auction volumes acted as a dampener. E-auction volumes were at 14.7 million tonnes (MT), down 44% YoY, 17% QoQ. E-auction realisations came in at Rs 2847/tonne, up 42% YoY, 10% QoQ Sales volumes were at 154 MT, up 1% YoY. FSA volumes during the quarter were at 135.8 MT, up 11% YoY. FSA realisations were at Rs 1334/tonne (up 13% YoY, 2% QoQ vs. our estimate: Rs 1315/tonne) Topline came in at Rs 25045.8 crore, up 15% YoY, 14% QoQ, higher than our estimate of Rs 24545.7 crore. Reported EBITDA came in at Rs 6787.1 crore, up 55% YoY, 57% QoQ, higher than our estimate of Rs 4612.9 crore. Corresponding EBITDA margin was at 27.1% (vs. Q3FY18: 20.2%, Q2FY19: 19.7%. Ensuing PAT was at Rs 4565.7 crore.

Outlook

We now value the stock at 5.5x FY20E adjusted EV/EBITDA and arrive at a target price of Rs 225. We have a HOLD recommendation on the stock.

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