Coal India - Production, Sales Volume Sustain The Uptrend: ICICI Securities
Plenty of positives despite lower e-auction premiums.
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ICICI Securities Report
Coal India Ltd.'s August 2023 operating numbers were robust. Key points:
production/sales volume continued at the highest-ever level for the fifth successive month in FY24;
South Eastern Coalfields Ltd.’s volume revival has offset the flat volumes from Mahanadi Coalfields Ltd.;
the traditional volume trough in Q2 is far lower in FY24 owing to increased rake availability;
higher volume to nonregulated sector, up 61% YoY in August 2023, is likely to maintain fuel supply agreement prices; and
pithead inventory at 45.3 million tonne remains at a comfortable level owing to production ramp-up.
Going ahead, we believe Coal India is likely to gain from operating leverage benefits accruing from higher sales volume for both NRS and e-auction customers, despite much lower e-auction premium than in FY23.
Maintain 'Buy' with an unchanged target price of Rs 285 (7.2 times FY25E earnings per share (core)).
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