Dear All,
Forwarding you the Result Update on Coal India for 4QFY2011 with a Neutral Recommendation.
For 4QFY2011, Coal India’s (CIL) net revenue and net profit came in above our expectations mainly on account of higher-than-expected realisations. We continue to maintain our Neutral view on the stock.
Strong performance led by higher coal prices: CIL’s net sales increased by 18.3% qoq to `15,016cr due to higher realisation. Average realisation grew by 15.1% qoq to `1,316/tonne on account of price hike undertaken in February 2011. During the quarter, coal production fell by 2.9% yoy to 132mn tonnes, while coal sales volume stood flat yoy at 114mn tonnes (up 2.8% qoq). Sales volumes were affected because of regulatory delays, imposition of Comprehensive Environment Pollution Index (CEPI) restrictions and logistical constraints, which resulted in inventory built-up of 70mn tonnes. Thus, led by higher realisations, EBITDA margin expanded by 987bp qoq to 37.0% and EBITDA grew by 61.3% qoq to `5,562r. EBITDA/tonne came in substantially higher at `488 vs. `311 in 3QFY2011. Further, tax rate for the quarter was lower at 29.0% as against 37.6% in 3QFY2011. As a result, net income increased by 60.7% qoq to `4,221cr.
Outlook and valuation: Currently, we lack clarity on the volume growth of the company in the wake of stricter government regulations on mining companies. Also, we believe any further chances of rise in coal prices by CIL in the near term remain muted. At the CMP, the stock is trading at 11.3x FY2012E and 9.9x FY2013E EV/EBITDA. We believe the current price levels fairly discount the robust business model and normalised volume growth over the medium term. Hence, we maintain our Neutral view on the stock.
Kindly click on the following link to view the Report.
If you have any further queries, feel free to call us on 022 39357600, Extn: 6865 or mail us at advisory@angelbroking.com
With best regards,
Fundamental Advisory Desk
Angel Broking
Akruti Star,6th Floor, Road No.7,MIDC, Andheri (E),Mumbai – 93.
Call : (91) (022) 39357600 Ext. 6865
Website : www.angelbroking.com
Disclaimer: Ours is an advisory role. The final decision and consequences based on our information is solely yours. Moreover, in keeping with regulatory guidelines, we do not guarantee any returns on investments. Prospective investors and others are cautioned that any forward-looking statements are not predictions and may be subject to change without notice.
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