Coal India- Upbeat by better FSA realisations and lower employee cost= Prabhudas Lilladher,

Coal India (CIL) reported Q1FY13 earnings marginally below our expectation on
account of lower-than-expected realisations in E-auction. However, expansion in FSA
realisations (would be further boosted by increase in WCL prices) and low employee
cost in the quarter reinforces our positive outlook for earnings in coming quarters.
This would more than offset the weakness in E-auction, partially driven by seasonal
fall in grades. We maintain our ‘BUY’ rating with TP of Rs390, 12.5x FY13E core EPS.

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􀂄 FSA realisations positive; E‐auction misses: Revenue grew 14% (PLe:17%) YoY at
Rs165bn (PLe:Rs169.5bn) on the back of 6.4% growth in volumes at 113m
tonnes (t) and 7% (PLe:10%) rise in realisations at Rs1,465 (PLe:Rs1503)/t. The
variance was primarily on account of lower-than-expected realisations in Eauction
at Rs2,561 (PLe:2,850)/t, partially off-set by better realisations in FSA at
Rs1,267 (PLe: Rs1,250).
􀂄 Lower employee cost, a key positive highlight: Total cost/t grew 13.6% to
Rs1,037, below our expectation of Rs1,059, primarily on account of lower-thanexpected
employee cost at Rs61.3bn (PLe: Rs65bn). This aided the company in
narrowing the miss on realisations. Management expects employee cost to be in
the range of Rs250-260bn against its earlier guided range of Rs260-270bn.
􀂄 EBITDA flat YoY, below expectation of 4% growth: Led by below expectation
realizations, CIL reported EBITDA below our expectation at Rs48.1bn (PLe:
Rs50bn, +4%), flat YoY. EBITDA/t for the quarter fell 6% to Rs427 (PLe: Rs445).
􀂄 PAT up 8%, driven by higher interest income: PAT grew by 8.3% to Rs44.8bn on
the back of 32% rise in other income and 100bps fall in tax rate at 29.4%. PAT
stood marginally below our expectation of Rs46.4bn; however, ahead of
consensus estimate of Rs41.7bn.