Coal India Limited
Quick Comment: Good Jump
in Volumes in August Though
Still Trailing the Target YTD
Impact on our views: We remain positive on medium
term prospects of the company even though we
acknowledge that share sale plans announced by the
government may weigh on the stock near term. Solid
volume growth, robust price hikes and meaningful
dividend payments are the key reasons for our optimism
over the medium term.
Strong YoY volume growth in August ’13: CIL
produced 31.7 mt of coal in August, implying YoY growth
of 10.8%, even though this was short of company’s
target by 3%. YTD F14, CIL has produced 167.3mt (YoY
growth of 2.8%), ~6mt short of the target. For full year
F14, we are assuming production of 477mt, i.e., about
5mt lower than the company’s target and indicative of
5.4%YoY growth. August YoY performance was aided
by base effect, as last year August and September had
seen muted output due to the monsoon effect.
Dispatches during the month were up 6.7% and YTD
F14 are up 3.7%. YTD F14 dispatches are trailing the
target by about 3.5mt. We are assuming full-year figure
of 491mt, about 1mt short of CIL’s own target and
implying YoY growth of 5.5%. Rail rake availability in
August stood at 177(up 13%YoY although sequentially a
decline of 6% due to monsoon impact). YTD F14 rail
rake availability has been 187, i.e., up 7.5%. YTD F14
the company has been able to liquidate about 21mt of
inventory and is now sitting on ~ 37mt of coal inventory.
We believe that in the remaining months of F14 the
company can achieve its target, and hence our volume
forecasts for F14 seem realistic to us.
Our assessment indicates that e-auction prices are
running slightly higher than those in 1QF14 even though
lackluster demand is curbing offtake of e-auction coal.
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Quick Comment: Good Jump
in Volumes in August Though
Still Trailing the Target YTD
Impact on our views: We remain positive on medium
term prospects of the company even though we
acknowledge that share sale plans announced by the
government may weigh on the stock near term. Solid
volume growth, robust price hikes and meaningful
dividend payments are the key reasons for our optimism
over the medium term.
Strong YoY volume growth in August ’13: CIL
produced 31.7 mt of coal in August, implying YoY growth
of 10.8%, even though this was short of company’s
target by 3%. YTD F14, CIL has produced 167.3mt (YoY
growth of 2.8%), ~6mt short of the target. For full year
F14, we are assuming production of 477mt, i.e., about
5mt lower than the company’s target and indicative of
5.4%YoY growth. August YoY performance was aided
by base effect, as last year August and September had
seen muted output due to the monsoon effect.
Dispatches during the month were up 6.7% and YTD
F14 are up 3.7%. YTD F14 dispatches are trailing the
target by about 3.5mt. We are assuming full-year figure
of 491mt, about 1mt short of CIL’s own target and
implying YoY growth of 5.5%. Rail rake availability in
August stood at 177(up 13%YoY although sequentially a
decline of 6% due to monsoon impact). YTD F14 rail
rake availability has been 187, i.e., up 7.5%. YTD F14
the company has been able to liquidate about 21mt of
inventory and is now sitting on ~ 37mt of coal inventory.
We believe that in the remaining months of F14 the
company can achieve its target, and hence our volume
forecasts for F14 seem realistic to us.
Our assessment indicates that e-auction prices are
running slightly higher than those in 1QF14 even though
lackluster demand is curbing offtake of e-auction coal.
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