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Coal India Ltd>
  • CMP : 209.1 Chg : 0.60 (0.29%)
  • Target : 225.0 (20.32%)
  • Target Period : 12 Month

31 May 2022

Performs well…

About The Stock

Coal India (CIL) is one of the largest coal producers in the world. In FY22, CIL produced 623 million tonnes (MT) while offtake for FY22 was at 662 MT.

  • CIL has 345 mines (as on April 1, 2021) of which 151 are underground, 172 open cast and 22 mixed mines
  • CIL has extensive mining capabilities. It has advanced technology in open cast mining
Q4FY22 Results

CIL reported a healthy operational performance in Q4FY22.

  • For Q4FY22, Coal India reported off take volume of 180 million tonnes (MT), up 9% YoY, 4% YoY (our estimate of 180 MT). FSA sales volume for the quarter were at 150 MT, up 13% YoY, 3% QoQ (our estimate of 150 MT), while FSA realisation for the quarter were at  1474/tonne, up 6% YoY, 8% QoQ (higher than our estimate of  1400/tonne). E-auction volume for the quarter was at 28 MT, up 6% QoQ but down 5% YoY (our estimate of 27 MT), while e-auction realisation for the quarter was at  2434/tonne, up 39% YoY and 25% QoQ (our estimate of  2400/tonne)
  • For Q4FY22, Coal India reported consolidated topline of  32707 crore, up 22% YoY, 15% QoQ (higher than our estimate of  31080 crore). Consolidated EBITDA for the quarter was at  9079 crore (up 41% YoY, 33% QoQ), higher than our estimate of  8555 crore. Consolidated EBITDA margin for the quarter was at 27.8% compared to 24.1% in Q4FY21 and 24% in Q3FY22 (our estimate of 27.5%). EBITDA/tonne for the quarter was at  504/tonne compared to  390/tonne in Q4FY21 and  393/tonne in Q3FY22 (our estimate of  475/tonne). Consolidated other income for the quarter was at  1789 crore up 46% YoY, 174% QoQ, higher than our estimate of  675 crore. Ensuing consolidated PAT for the quarter was at  6715 crore, up 46% YoY, 47% QoQ (our estimate of  6020 crore)
What should Investors do?

CIL’s share price has given a return of ~26% in the last 12 months (from ~ 148 in May 2021 to ~ 187 levels in May 2022).

  • We maintain our BUY rating on the stock
Target Price Valuation

We value CIL at  225, 4.5x FY24E EV/EBITDA

Key Triggers for future price performance
  • Over FY22-24E, we expect CIL’s consolidated topline to grow at a CAGR of 3.2% while consolidated EBITDA and consolidated PAT are expected to register a CAGR of 6.3% and 5.6%, respectively
  • We expect CIL’s consolidated EBITDA margins to hover at ~24% for next couple of years (24.0% for FY23E & 23.9% in FY24E)
New Stock Ideas

In our sector coverage, we like Ratnamani Metals and Tubes.

  • Ratnamani Metals and Tubes (RMTL) is a niche player with superior capabilities in the industrial pipes and tubes segment
  • BUY with a target price of  2950   

Key Financial Summary

(| Crore) FY19 FY20 FY21 FY22 CAGR in % (FY19-FY22) FY23E FY24E CAGR in % (FY22-FY24E)
Total Operating Income 99,586.0 96,080.0 90,026.0 109,714.0 5.9 111,031.0 116,822.0 3.2
EBITDA 25,006.0 21,581.0 18,574.0 24,691.0 15.1 26,600.0 27,882.0 6.3
EBITDA Margin (%) 25.1 22.5 20.6 22.5 - 24.0 23.9 -
PAT 17,464.0 16,700.0 12,702.0 17,378.0 3.8 18,649.0 19,383.0 5.6
EPS (|) 28.3 27.1 20.6 28.2 - 30.3 31.5 -
EV/EBITDA (x) 3.3 4.3 5.4 3.5 - 3.4 3.5 -
RoCE (%) 86.3 54.6 42.3 52.0 - 48.2 44.7 -
RoE (%) 66.0 51.9 34.8 40.3 - 36.8 33.6 -
- - - - - - - - -
Source: Company, ICICI Direct Research

Variance Analysis

  Q4FY22 Q4FY22E Q4FY21 YoY (%) Q3FY22 QoQ (%) Comments
Total Operating Income 32707 31080 26700 22 28434 15 Consolidated topline came in higher than our estimate
Other Income 1789 675 1224 46 653 174 Consolidated Other income came in higher than our estimate
Total Expenditure  23628 22525 20262 17 21608 9  
EBITDA 9079 8555 6438 41 6825 33 Consolidated EBITDA came in higher than our estimate
EBITDA Margin (%) 27.8 27.5 24.1 365 bps 19.2 860 bps Consolidated EBITDA margin came in broadly in line with our estimate
Depreciation 1412 1050 1097 29 1041 36  
Interest 121 135 157 -23 132 -8  
Share of JV 1 0 -3 NA -3 NA  
PBT 9335 8045 6406 46 6302 48  
Total Tax 2620 2025 1817 44 1746 50  
PAT 6715 6020 4589 46 4557 47 Consolidated PAT came in higher than our estimate
Key Metrics              
Coal Sales (million tonne) 180 180 165 9 174 4 Total off take came in line with our estimate 
FSA Volumes 150 150 133 13 145 3 FSA volume came in line with our estimate
FSA Realisations 1474 1400 1392 6 1370 8 FSA realisations came in line with our estimate 
E-auction volumes 28 27 29 -5 26 6 E-auction came in broadly in line with our estimate
E-auction realisations 2434 2400 1752 39 1947 25 E-auction realisation came in broadly in line with our estimate 
EBITDA/tonne 504 475 390 29 393 28 EBITDA/tonne came in higher than our estimate 

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