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Coal India Limited — Results ahead on higher
other income
Estimate Change
PAT ahead led by higher other income; Maintain Neutral
PAT grew 65%YoY (-2%QoQ) to Rs41.4bn vs. our Rs38bn est. EBITDA was
Rs48.2bn (+55%YoY) vs. our Rs51.4bn est. due to higher provision & OBR
charges. However, higher financial income due to higher interest rates (up 300bp)
lead to the results beat. We have cut our FY12-14E EPS by 12-14% as we
include non cash overburden charges (OBR), as OBR accounting policy change
is delayed. PO is unchanged as it is cash flow/ NPV neutral. While fundamentals
are strong, our NPV (Rs400) leaves limited upside potential. Hence Neutral
1Q: Off take & ASP in line; provision higher than expected
1Q coal off take was 106.3mt (+5%YoY) vs. output of 96.3mt (+0%QoQ). Washed
coal vols. grew 9.6%YoY to 3.54mt (3.7% of output). ASP was up 12%QoQ
(Rs1365/t) due to full impact of coal price hikes in Mar 11. E-auction ASP was
Rs2270/t (66% premium to avg. realization). Provisions jumped to Rs2.9bn (51%
of FY11 provisions). Avg. rake availability was 165rakes/day, 7%YoY.
Dispatches better in July; Maintains FY12 off take target
1Q vol. growth was below FY12 guidance led by heavy rains & logistic issues, but
July off take has improved 7%YoY to 35.8mt. CIL is implementing initiatives to
resolve coal crushing bottleneck to reduce coal stocks. Rake availability remains
a key issue. If July off take rate sustain thru Sept Q, we est. ~185 rake/day (165
rakes in 1Q) will be required in 2H to meet FY12 off take guidance of 7%YoY.
Wage negotiations to start in Aug
Joint Bipartite Committee for Coal Industry has been formed. Discussions will
start after it gets the charter demands on Aug 20-21st. CIL said it will start making
provisions Sept Q onwards. The provision amount will be decided after initial
discussions. We expect 30% wage hike in FY12e but provision could be lower
initially. CIL plans to retain pricing and expects to review pricing at the end of
FY12.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Coal India Limited — Results ahead on higher
other income
Estimate Change
PAT ahead led by higher other income; Maintain Neutral
PAT grew 65%YoY (-2%QoQ) to Rs41.4bn vs. our Rs38bn est. EBITDA was
Rs48.2bn (+55%YoY) vs. our Rs51.4bn est. due to higher provision & OBR
charges. However, higher financial income due to higher interest rates (up 300bp)
lead to the results beat. We have cut our FY12-14E EPS by 12-14% as we
include non cash overburden charges (OBR), as OBR accounting policy change
is delayed. PO is unchanged as it is cash flow/ NPV neutral. While fundamentals
are strong, our NPV (Rs400) leaves limited upside potential. Hence Neutral
1Q: Off take & ASP in line; provision higher than expected
1Q coal off take was 106.3mt (+5%YoY) vs. output of 96.3mt (+0%QoQ). Washed
coal vols. grew 9.6%YoY to 3.54mt (3.7% of output). ASP was up 12%QoQ
(Rs1365/t) due to full impact of coal price hikes in Mar 11. E-auction ASP was
Rs2270/t (66% premium to avg. realization). Provisions jumped to Rs2.9bn (51%
of FY11 provisions). Avg. rake availability was 165rakes/day, 7%YoY.
Dispatches better in July; Maintains FY12 off take target
1Q vol. growth was below FY12 guidance led by heavy rains & logistic issues, but
July off take has improved 7%YoY to 35.8mt. CIL is implementing initiatives to
resolve coal crushing bottleneck to reduce coal stocks. Rake availability remains
a key issue. If July off take rate sustain thru Sept Q, we est. ~185 rake/day (165
rakes in 1Q) will be required in 2H to meet FY12 off take guidance of 7%YoY.
Wage negotiations to start in Aug
Joint Bipartite Committee for Coal Industry has been formed. Discussions will
start after it gets the charter demands on Aug 20-21st. CIL said it will start making
provisions Sept Q onwards. The provision amount will be decided after initial
discussions. We expect 30% wage hike in FY12e but provision could be lower
initially. CIL plans to retain pricing and expects to review pricing at the end of
FY12.
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