19 October 2010

Coal India Limited: Size does matter…says ICICI Sec

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Coal India Limited: Size does matter…

Coal India Limited (CIL), a Navratna PSU, is the largest coal producing
company in the world with a total coal production of ~445.9 million
tonnes (MT) in FY10. In terms of reserves also, it is the world’s largest
coal company with proven reserves of ~18.9 billion tonnes and
resources of ~64.3 billion tonnes. CIL has garnered Rs 46684.3 crore
and Rs 11940.3 crore as revenue for FY10 and Q1FY11, respectively,
while PAT (restated) was reported at Rs 9829.41 crore and Rs 2521.78
crore, respectively. EBITDA margin for the same period remained at
~22% and 26%, respectively. As on March 31, 2010, the company holds
cash reserves of Rs 39700 crore with net debt- equity ratio at 1.4.





􀂃 Largest producer and supplier of coal
Being the largest producer of coal, CIL contributes 80% of the
country’s total coal output. Open cast mines contribute 90% to CIL’s
total coal production. Though CIL virtually supplies its coal to all
relevant industries, 80% of the coal requirement by the country’s
power sector is met by CIL. At present (FY10), ~96.5% of the
company’s revenue is contributed by raw coal.
􀂃 Focus on beneficiation and margin expansion
CIL has been focusing on increasing its beneficiated coal capacity to
~111.1 MT by 2017 from ~13 MT in FY10. Currently, the cash cost
of production of coal from open cast mines is Rs 745/tonne (among
the lowest in the world) while the average selling price is Rs 1097/
tonne.
Concerns
Major concerns for the company are a) huge employee costs (~36%
of the revenue in FY10), b) current issues related to forest and
environment clearances for new mining projects that may delay the
projects, c) issues related to Naxalites and mafia in its major
operational area and d) infrastructure bottlenecks.
Valuations
At the higher IPO price band of Rs 245, CIL discounts its FY10 EPS (post
issue) and FY10 EV/EBITDA by 15.7x and 11.3x, respectively. On
EV/tonne (reserve), the stock is available at Rs 62.4 on FY10 basis.

Corporate Action 19th October to 22nd October 2010

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Scrip Code
Scrip Name
Ex-Date
Purpose
Rs.
532780
Parsvnath Dev
18-Oct-10
Stock Split from Rs. 10/- to Rs. 5/-
 -
509930
Supreme Inds
18-Oct-10
Stock Split from Rs. 10/- to Rs. 2/-
 -
532339
Compucom Soft
19-Oct-10
BONUS 1:2
 -
515037
Murudeshwar Cer
19-Oct-10
Right 1:1
 -
517001
Birla Power
20-Oct-10
BONUS 1:5
 -
532658
Indo Asian Fuse
20-Oct-10
Special Dividend
10
570002
PANTALBNDVR
20-Oct-10
Dividend
0.9
523574
Pantaloon Retl
20-Oct-10
Dividend
0.8
532349
Transport Corp
20-Oct-10
Scheme of Arrangement
 -
532813
C&C Const
21-Oct-10
Dividend
2.75
500130
Elgi Finance
21-Oct-10
Amalgamation
 -
500086
Exide Inds
21-Oct-10
Interim Dividend
0.9
532345
Gati
21-Oct-10
Dividend
0.4
500209
Infosys
21-Oct-10
Interim Dividend
10
500209
Infosys
21-Oct-10
Special Dividend
30
512626
Orbit Exports
21-Oct-10
Interim Dividend
1.5
532993
Sezal Glass
21-Oct-10
Stock Split from Rs. 10/- to Re. 1/-
 -
506690
Unichem Lab
21-Oct-10
Stock Split from Rs. 5/- to Rs. 2/-
 -
530343
Genus Power
22-Oct-10
Stock Split from Rs. 10/- to Re. 1/-
 -
532281
HCL Tech
22-Oct-10
Final Dividend
1
500227
Jindal Poly
22-Oct-10
BONUS 1:1
 -
531612
KGN Inds
22-Oct-10
Dividend
0.01
532106
REI Agro
22-Oct-10
Interim Dividend
0.1
532384
Tyche Inds
22-Oct-10
Dividend
0.5


IPO Issue Price (Rs.) for BS Transcomm, Prestige and Gyscoal Alloys

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IPO Issue Price (Rs.) for BS Transcomm, Prestige and Gyscoal Alloys


B S Trans: Rs 248 (Lower band)


Prestige Estates: Rs 183 (Upper Band)


Gyscoal Alloys: Rs 71 (Upper Band)




Company Name
Offer Price
Premium
(Rs.)
(Rs.)


Oberoi Realty
260
(Upper Band)
8 to 10
B S Trans
248
(Lower
band)
DISCOUNT
Prestige Estates
183
(Upper Band)
DISCOUNT
Gyscoal Alloys
 71
(Upper Band)
12 to 14
Coal India
225 to 245
11 to 12
+  5% discount for retail