Coal India - E-Auction Volumes To Rise To 15% In Q4: Axis Securities

Axis Securities Report

Coal India Ltd.'s posted robust results (reported earlier on Feb 13, 2024) with Ebitda/profit after tax beating ours and consensus estimates. Total consolidated revenue stood at Rs 36,154 crore (up 3%/10% YoY/QoQ), which was in line with our estimates.

Ebitda stood significantly ahead of our and consensus estimate at Rs 11,373 crore (up 9%/40% YoY/QoQ), mainly led by lower raw material costs (down 41%/47% YoY/QoQ) and stable employee expenses (flat YoY, down by 1% QoQ).

Attributable PAT stood at Rs 9,069 crore, up 17%/33% YoY/QoQ, ahead of consensus by 17%, led by higher Ebitda and other income. Coal India declared a second interim dividend of Rs 5.25/share with February 20th 2024 as the record date.

The first interim dividend was declared in November 2023 at Rs 15.25/share, which brings the total interim dividend for FY24 to Rs 20.5/share.

Valuation and Recommendation:

We value the stock at 5.0 times one-year forward enterprise value/Ebitda multiple on FY26E Adjusted Ebitda (unchanged).

We arrive at our target price of Rs 510/share (from Rs 500/share), implying an upside of 11% from the current market price.

Key risks to our estimates and target price

• The key risk to our 'Buy' rating is the decline in e-Auction volumes versus our expectations.

• Lower than expected e-auction premiums.

• Lower coal offtake than our assumptions for FY25/26E.

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