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Based on media reports, Q4FY12 production volume of Coal India (CIL)
could touch 139mt, but rakes availability issues may cap despatches to
125mt (our estimate for both production and despatches is 125mt). Yet,
considering the weak performance in H1FY12, this is a significant scale‐up
and improves visibility for FY13 volume.
Coal India produces 45.8mt of coal in Feb‐12, up 17% YoY
As per media reports, CIL produced 45.8mt of coal in Feb-12, up from 39mt in Feb-
11 and 44.7mt in Jan-12. Coal despatches increased 12% YoY in Feb-12 to 39.3mt.
Q4FY12 production to exceed expectations but logistics a concern
Assuming the daily run-rate of 1.6mt achieved in Feb-12 sustains, Mar-12
production could be 49mt and accordingly Q4FY12 production could touch 139mt,
up ~5.4% YoY. However, rakes availability would need to improve to 216
rakes/day (currently 197) for Q4FY12 despatches to exceed our estimate of 125mt.
Q4FY12 to be hit by higher employee costs
We have assumed a 28% QoQ rise in CIL’s employee costs to INR 71.9bn, owing to
new wage settlement. Final impact would depend on actuarial valuation.
Outlook and valuation: Production growth remains the key
The last quarter of every fiscal has always been the best for CIL; sustaining such
performance for FY13 and FY14, as a whole, is not possible. We are building in
production of 440mt for FY13 against management guidance of 463mt. However,
we are structurally positive on CIL, led by: (i) strong pricing power, (ii) production
increase in FY14 led by faster approvals in FY13, and (iii) reduced overhang of
wage increase and cash usage. We maintain ‘BUY/ Sector Outperformer’
recommendation/ rating on the stock (Target Price: INR430).
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Based on media reports, Q4FY12 production volume of Coal India (CIL)
could touch 139mt, but rakes availability issues may cap despatches to
125mt (our estimate for both production and despatches is 125mt). Yet,
considering the weak performance in H1FY12, this is a significant scale‐up
and improves visibility for FY13 volume.
Coal India produces 45.8mt of coal in Feb‐12, up 17% YoY
As per media reports, CIL produced 45.8mt of coal in Feb-12, up from 39mt in Feb-
11 and 44.7mt in Jan-12. Coal despatches increased 12% YoY in Feb-12 to 39.3mt.
Q4FY12 production to exceed expectations but logistics a concern
Assuming the daily run-rate of 1.6mt achieved in Feb-12 sustains, Mar-12
production could be 49mt and accordingly Q4FY12 production could touch 139mt,
up ~5.4% YoY. However, rakes availability would need to improve to 216
rakes/day (currently 197) for Q4FY12 despatches to exceed our estimate of 125mt.
Q4FY12 to be hit by higher employee costs
We have assumed a 28% QoQ rise in CIL’s employee costs to INR 71.9bn, owing to
new wage settlement. Final impact would depend on actuarial valuation.
Outlook and valuation: Production growth remains the key
The last quarter of every fiscal has always been the best for CIL; sustaining such
performance for FY13 and FY14, as a whole, is not possible. We are building in
production of 440mt for FY13 against management guidance of 463mt. However,
we are structurally positive on CIL, led by: (i) strong pricing power, (ii) production
increase in FY14 led by faster approvals in FY13, and (iii) reduced overhang of
wage increase and cash usage. We maintain ‘BUY/ Sector Outperformer’
recommendation/ rating on the stock (Target Price: INR430).
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