Coal India Limited (COAL.NS): 1QF14: Lower E-auction Realization Drives Miss :Morgan Stanley Research
Quick Comment: Coal India reported 1QF14 Pat of Rs37.3bn, down 16.5%YoY and 31.1%QoQ and 23% below MSe. Lower e-auction realizations on the back of softening global coal prices and grade deterioration primarily drove the miss. EBITDA was Rs43.0bn, down 16.2%YoY and 34.8%QoQ.
1QF14 Highlights:
Average realizations, in 1QF14 were Rs1404/t, down 2.3%YoY and 7.0%QoQ and 5% below MSe. E-auction realizations were Rs2,140/t, down 16.4%YoY and 7.3%QoQ and 14% below MSe.
Volumes: 1QF14 production volumes were 102.9mt, flat on a YoY basis. Sales volumes were 115.4mt up 2.1% YoY. E-auction volume proportion was 11.5% compared to 11.9% in 1QF13 and 11.5% in 4QF13.
Costs: 1) Consumption of stores and spares per ton was Rs134/t, up 11.2%YoY but down 5.3%QoQ. 2) Employee expenses were Rs68.1bn, up 11.1%YoY and down 8.8%QoQ. The YoY rise is partially due to the inclusion of a large part of the Corporate Social Responsibility (CSR) expenses. 3) Power and fuel cost per ton was Rs51/t up 1.4%YoY and 27.4%QoQ. 4) Contractual expenses per ton were Rs144/t compared to Rs120/t in 1QF13 and Rs139/t in 4QF13. 5) Misc. expenses were Rs6.7bn compared to 5.6bn in 1QF13 and 8.2bn in 4QF13.
Other Income was Rs22.2bn, up 7.2%YoY and 0.6%QoQ.
We continue to remain Overweight on CIL: 1) We expect CIL to raise FSA prices in the near term for the non-power sector. 2) With a cash balance of US$11.8bn at end of F13, we expect CIL to increase its dividend per share from Rs10 in F12, Rs14 in F13 to Rs25.2 in F14e, implying dividend yield of 9.9% based on F14e, which appears attractive, in our view.
1QF14 Highlights:
Average realizations, in 1QF14 were Rs1404/t, down 2.3%YoY and 7.0%QoQ and 5% below MSe. E-auction realizations were Rs2,140/t, down 16.4%YoY and 7.3%QoQ and 14% below MSe.
Volumes: 1QF14 production volumes were 102.9mt, flat on a YoY basis. Sales volumes were 115.4mt up 2.1% YoY. E-auction volume proportion was 11.5% compared to 11.9% in 1QF13 and 11.5% in 4QF13.
Costs: 1) Consumption of stores and spares per ton was Rs134/t, up 11.2%YoY but down 5.3%QoQ. 2) Employee expenses were Rs68.1bn, up 11.1%YoY and down 8.8%QoQ. The YoY rise is partially due to the inclusion of a large part of the Corporate Social Responsibility (CSR) expenses. 3) Power and fuel cost per ton was Rs51/t up 1.4%YoY and 27.4%QoQ. 4) Contractual expenses per ton were Rs144/t compared to Rs120/t in 1QF13 and Rs139/t in 4QF13. 5) Misc. expenses were Rs6.7bn compared to 5.6bn in 1QF13 and 8.2bn in 4QF13.
Other Income was Rs22.2bn, up 7.2%YoY and 0.6%QoQ.
We continue to remain Overweight on CIL: 1) We expect CIL to raise FSA prices in the near term for the non-power sector. 2) With a cash balance of US$11.8bn at end of F13, we expect CIL to increase its dividend per share from Rs10 in F12, Rs14 in F13 to Rs25.2 in F14e, implying dividend yield of 9.9% based on F14e, which appears attractive, in our view.
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