Shares of Coal India
(CIL) hit a fresh 52-week low of Rs237 on the BSE after the government sold more than 2% stake in the company to Reliance Nippon Life Asset Management. The stock has fallen by 6% in three days.
The President of India, acting through the Ministry of Coal, Government of India, has sold 13.7cr equity shares representing 2.21% stake of Coal India to Reliance Nippon Life Asset Management, as the AMC of the CPSE ETF mutual fund scheme, the company said in its BSE filing.
Post this transaction, the Government of India’s holding in Coal India has declined to 72.92%.
Coal India Ltd is currently trading at Rs238.95 down by Rs1.75 or 0.73% from its previous closing of Rs240.70 on the BSE. The scrip opened at Rs242 and has touched a high and low of Rs242.90 and Rs237 respectively.
CIL holds a dominant market share in coal mining and produces 84% of the nation’s coal output. However, the government allowed private miners to engage in commercial coal mining in February 2018, thereby ending the monopoly status enjoyed by CIL. The production and offtake targets for CIL in FY19 have been set at 652mn tonnes and 681mn tonnes, respectively. CIL's production for Q2FY19 stood at 119.6mn tonnes (up ~6% yoy), while offtake for the same period stood at 137.4mn tonnes (up ~4% yoy). The achievement of offtake targets for H1FY19 stood at ~85%.
Coal India is likely to see revenue CAGR of 8.5% over FY18-20E backed by a sharp rise in coal production in FY19-20E. EBITDA margins are likely to expand 1,424bps over FY18-20E due to (1) higher levels of production, and (2) firm realizations due to higher offtake from thermal generators. We expect this revenue growth to lead to PAT CAGR of 63.2% over FY18-20E with an EBITDA margin of 25.4% in FY20E. The stock is currently trading at 8.2x FY20E EPS.