Coal India - DOWNGRADE :: ICICI Securities, pdf link

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Subdued performance, downgrade to HOLD

Government support to aid production growth, going forward
Coal production at CIL has been sluggish with FY13 and FY14 coal
production growth at 3.7% and 2.3%, respectively. We believe the recent
relaxation in environmental norms is likely to aid CIL in ramping up
production. Going forward, we expect the company to clock coal
production CAGR of 6.0% in FY14-16E to 520 MT. On the back of
increasing coal production and better rail raw rake availability, we expect
coal sales volumes to grow at a CAGR of 5.5% in FY14-16E to 525 MT.
Competitive cost of production resulting in healthy operating margins
CIL produces ~90% of its coal through open cast mining and witnesses
low stripping ratio, thereby ensuring that reserves are easily extractable.
Hence, this helps to position the company as among the lowest cost coal
producers in the world. CIL’s blended cost of production stands at
~| 1050/tonne (~US$18 /tonne).
Attractive dividend yield, dividend payout to remain healthy
CIL has gradually increased the dividend payout from 23% in FY11 to
51% in FY13. In FY14, the company also gave a one-time special dividend
of | 29/share. We believe the dividend payout will remain healthy, going
forward, as the company possesses surplus cash on its books with
modest capex requirements


LINK
http://content.icicidirect.com/mailimages/IDirect_CoalIndia_Q2FY15.pdf