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About the Company
Coal India Limited (CIL) is the largest coal producing company in the world.CIL is also the largest coal reserve holder in the world.
The company has a coal resources of 64,786 million tons comprising pursuant of ISP classifications, Proved Geological Reserves of
52,546 million tons, Indicated Geological Reserves of 10,298 million tons and Inferred Geological Reserves of 1,942 million tons.
Reserves aggregating to 21,754 million tons have been estimated as extractable reserves.
CIL produces non-coking coal and coking coal of various grades for diverse applications. A significant majority of non-coking coal is
produced by the company is from mines operated in the Korba, Singrauli, Talcher, IB Valley and Wardha Valley coalfields. Most of
coking (metallurgical) coal is produced at the Jharia coalfield.
Investment Rationale
CIL has recently revised its production target for the current fiscal. As per the new targets the company will produce 440MT of coal in
FY12. Previous target was at around 452MT. Production dropped 5% in the first half of the current fiscal. This decline is due to the
adverse weather, labour strikes and delay in getting clearance to mine new assets.
Production in the first half stood at 176.62MT i.e. 40% of the revised target for the current fiscal. This shows that to meet the new
target, CIL has to produce 263.38MT in the second half. During the second half of the previous fiscal i.e. of FY11, the company has
produced around 246MT of coal.
Cash reserve of the company is expected to reach ` 600bn by the end of the current fiscal. The company is planning to lend around
` 150bn to the government and expecting an interest income of ` 40bn every year from this way.
Valuation
At ` 300 per share, the stock is trading at 12.15x to the earnings of FY12E and 10.61x to the earnings of FY13E. On the basis of
price to book value it is currently trading at 3.87x and 2.84x respectively for FY12E and FY13E. We expect the topline and bottomline
of the company will grow at a compounded rate of 17% and 23% respectively over FY10 to FY13E. We set the long term target price
` 355.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
About the Company
Coal India Limited (CIL) is the largest coal producing company in the world.CIL is also the largest coal reserve holder in the world.
The company has a coal resources of 64,786 million tons comprising pursuant of ISP classifications, Proved Geological Reserves of
52,546 million tons, Indicated Geological Reserves of 10,298 million tons and Inferred Geological Reserves of 1,942 million tons.
Reserves aggregating to 21,754 million tons have been estimated as extractable reserves.
CIL produces non-coking coal and coking coal of various grades for diverse applications. A significant majority of non-coking coal is
produced by the company is from mines operated in the Korba, Singrauli, Talcher, IB Valley and Wardha Valley coalfields. Most of
coking (metallurgical) coal is produced at the Jharia coalfield.
Investment Rationale
CIL has recently revised its production target for the current fiscal. As per the new targets the company will produce 440MT of coal in
FY12. Previous target was at around 452MT. Production dropped 5% in the first half of the current fiscal. This decline is due to the
adverse weather, labour strikes and delay in getting clearance to mine new assets.
Production in the first half stood at 176.62MT i.e. 40% of the revised target for the current fiscal. This shows that to meet the new
target, CIL has to produce 263.38MT in the second half. During the second half of the previous fiscal i.e. of FY11, the company has
produced around 246MT of coal.
Cash reserve of the company is expected to reach ` 600bn by the end of the current fiscal. The company is planning to lend around
` 150bn to the government and expecting an interest income of ` 40bn every year from this way.
Valuation
At ` 300 per share, the stock is trading at 12.15x to the earnings of FY12E and 10.61x to the earnings of FY13E. On the basis of
price to book value it is currently trading at 3.87x and 2.84x respectively for FY12E and FY13E. We expect the topline and bottomline
of the company will grow at a compounded rate of 17% and 23% respectively over FY10 to FY13E. We set the long term target price
` 355.
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