Hold Coal India; target of Rs 330: ICICI Direct

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26 Aug, 2025 12:21

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ICICI Direct's research report on Coal India

In its board meeting, Coal India (CIL) has approved the upward revision of non-coking coal prices with effect from January 9, 2018. The price hike will be applicable to all subsidiaries including North Eastern Coalfields for regulated and non-regulated sectors. CIL, on account of this price revision will earn incremental revenues of ~Rs 1956 crore for the balance period of FY18. For FY19E, the projected incremental revenue would be ~Rs 6421 crore. Further, in December 2017, the company also levied an evacuation facility charge of Rs 50/tonne on despatch of coal on all despatches, except through rapid loading arrangement (with immediate effect from December 19, 2017). The said levy is also expected to generate revenues of Rs 2500 crore in FY19E. The benefit of both price hike and levy of evacuation charges is likely to flow down positively to EBITDA, which augurs well.
Outlook
The price hike augurs well for CIL, as additional revenue generated through both price hike and evacuation charges will broadly aid the company in covering increased employee cost. CIL’s employee cost increased on account of the wage hike finalised earlier during the year leading to an annual impact of Rs 5667 crore. We upward revise our topline and EBITDA estimates for FY18E and FY19E reflecting the additional revenues to be generated. We value the stock at 7.5x FY19E adjusted EV/EBITDA and arrive at a target price of Rs 330. We maintain HOLD recommendation on the stock with a target price of Rs 330.

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