In contrast to Motilal’s estimate of Rs 5,000 crore, Coal India grew 13% YoY to Rs 6,800 crore, driven by improved operating performance and decreased depreciation. EBITDA increased 11% YoY to approximately Rs 8,900 crore.
Higher-than-expected coal prices and lower-than-expected personnel costs helped Coal India Ltd. post better-than-expected Q2 results. Power demand typically peaks in May due to summer heat waves, but this year’s drier monsoon and strong economic activity kept demand for Coal India—a seasonally weak quarter—high. Analysts noted this.
Coal India has maintained its FY24 target dispatch to the power sector at 610 million tonnes, taking into account the enormous demand from the sector. Analysts predicted that performance would continue to improve in the second half of the fiscal year.
Based on the robust performance, enhanced volume outlook, e-auction premiums, and reduced expenses, we have raised our EBITDA projections by 16% and 12% for FY24 and FY25, respectively. In terms of FY25 EV/Ebitda, the stock is trading at 4.1 times. With a revised target price of Rs 380, which values the stock at five times FY25E EV/Ebitda, we continue to recommend buying. Our top choice in the mining industry is still Coal India, according to Motilal Oswal Securities.
In contrast to its projected profit of Rs 5,000 crore, the brokerage reported that Coal India’s profit increased 13% YoY to Rs 6,800 crore, driven by improved operating performance and decreased depreciation. Due to lower-than-expected personnel costs, EBITDA increased 11% YoY to approximately Rs 8,900 crore, which was 54% higher than the brokerage estimate of Rs 5,800 crore.
The brokerage stated that even though the e-auction premium has decreased from its peak, it is still higher than its historical average and is predicted to be between 80 and 85 percent for FY24E.
Because of the increased e-auction prices, this brokerage has adjusted its FY24E and FY25 EBITDA by 5% and 7%, respectively. Except for the FY24E/25E dividend per share of Rs 30/25, we value CIL at 4.5 times the FY25E/26E average, which increases its fair value to Rs 404 from Rs 389 previously.
