CMP Rs323, Target Rs353, Upside 9.7%
Q2 FY12 revenue of Rs131bn was 24.5% higher on a yoy basis. The increase in revenue was largely driven by higher realisations. Realisation during the quarter were higher by 24.5% yoy and 2.8% qoq to Rs1,403/ton. The increase in realisation was due to the price hikes taken in mid-Q4 FY11 and higher proportion of e-auction sales. Realisations on coal sold through e-auction increased from Rs2,245/ton in Q1 FY12 to Rs2,435/ton. Dispatches for the quarter were lower higher by 4.7% yoy to 93.7mn tons. Production too was lower by 11.2% on yoy basis to 80.3mn tons. The decline in offtake and production was due to heavy rainfall in the region. The company is 26mn tons behind its target volumes for FY12.
Operating profit for the quarter surged 33.3% yoy to Rs24.8bn on the back of improved realisations. EBIDTA/ton in Q2 FY12 stood at Rs264, higher by 39.9% on a yoy basis, but lower by Rs41.7% on a qoq basis. The improvement in EBIDTA/ton was largely on account of higher realisations, as cost too was up 21.4% yoy and 25% qoq. The jump in costs was largely due higher employee costs and increase in stores and spares. The company has made provision of Rs7.5bn (Rs30bn on a full year basis) for the increase in employee costs. Stores and spares increased due to higher diesel costs and rise in costs of explosives.