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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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