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Coal India (CIL) has raised FY13 production target to 470mt from 463mt, in
view of strong recovery in Q4FY12 production. The renewed momentum,
recent clearance of 19mtpa projects by MOEF and accumulated inventory
of 74.5mt convey upside risk to our FY13 sales assumption of 450mt.
Maintain ‘BUY’.
Raises FY13 production volume target to 470mt from 463mt
Coal production recovered strongly in Q4FY12 surging 9.7% YoY against decline of
2.8% YoY for 9mFY12. Hence, CIL has raised production target for FY13 to 470 mt
from 463mt. Total production of CIL for FY12 stood at 435.8mt while despatches
were 431.3mt, leading to inventory addition of ~4.5mt (total inventory increased to
~74.5mt by end of FY12).
MOEF clears coal projects totaling 19mtpa
MOEF has cleared a total of 10 projects of CIL in Feb-12 and Mar-12 with capacity
of 19mtpa, and is likely to further accelerate its coal project clearances in our view.
Further, in Feb-12, CIL’s Board has approved the Amrapali project with 12mtpa
capacity (expected production of 1.5mtpa in FY13).
Outlook and valuations: Upside risk to FY13 volumes; maintain BUY
For FY13, we have estimated sales volume of 450mt. The company’s target of
470mt in view of Q4FY12 production, clearances by MOEF and availability of 74mt
inventory convey upside risk to our assumption. Rake availability for Q4FY12 was
~199 rakes/day, a substantial improvement over FY12 average of ~169 rakes/day.
As per media reports, the adverse impact of forced signing of new FSAs with 80%
trigger level is likely to be mitigated by only 1% penalty payment (against 10%
currently) and stringent conditions. We retain our ‘BUY/SO’ recommendation on
CIL with a price target of INR 430.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Coal India (CIL) has raised FY13 production target to 470mt from 463mt, in
view of strong recovery in Q4FY12 production. The renewed momentum,
recent clearance of 19mtpa projects by MOEF and accumulated inventory
of 74.5mt convey upside risk to our FY13 sales assumption of 450mt.
Maintain ‘BUY’.
Raises FY13 production volume target to 470mt from 463mt
Coal production recovered strongly in Q4FY12 surging 9.7% YoY against decline of
2.8% YoY for 9mFY12. Hence, CIL has raised production target for FY13 to 470 mt
from 463mt. Total production of CIL for FY12 stood at 435.8mt while despatches
were 431.3mt, leading to inventory addition of ~4.5mt (total inventory increased to
~74.5mt by end of FY12).
MOEF clears coal projects totaling 19mtpa
MOEF has cleared a total of 10 projects of CIL in Feb-12 and Mar-12 with capacity
of 19mtpa, and is likely to further accelerate its coal project clearances in our view.
Further, in Feb-12, CIL’s Board has approved the Amrapali project with 12mtpa
capacity (expected production of 1.5mtpa in FY13).
Outlook and valuations: Upside risk to FY13 volumes; maintain BUY
For FY13, we have estimated sales volume of 450mt. The company’s target of
470mt in view of Q4FY12 production, clearances by MOEF and availability of 74mt
inventory convey upside risk to our assumption. Rake availability for Q4FY12 was
~199 rakes/day, a substantial improvement over FY12 average of ~169 rakes/day.
As per media reports, the adverse impact of forced signing of new FSAs with 80%
trigger level is likely to be mitigated by only 1% penalty payment (against 10%
currently) and stringent conditions. We retain our ‘BUY/SO’ recommendation on
CIL with a price target of INR 430.
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