Coal India Ltd (Q2 FY13)

India Infoline News Service | Mumbai |

Revenue of Rs145bn was 10.8% higher on a yoy basis, but lower by 11.7% on a qoq basis.

CMP Rs346, Target Rs356, Upside 2.9% 
  • Higher than expected coal offtake led to an outperformance in topline
  • Offtake during the quarter increased by 8.5% yoy to 101.7mn tons, production too was higher by 10.9% yoy
  • Realisations for the quarter declined 1.9% qoq to Rs1,432/ton against our expectation of Rs1,440. The decline is largely on account of lower e-auction and washed coal prices
  • Employee costs increased 6.6% qoq to Rs65.4bn, higher than estimate
  • EBIDTA/ton decreased from Rs425 in Q1 FY13 to Rs281, lower than our estimate of Rs311 due to higher employee and stores costs
  • Maintain Market Performer rating with a 9-month price target of Rs356 
Result table
(Rs mn) Q2 FY13 Q1 FY13 % qoq Q2 FY12 % yoy
Net sales 145,725 165,006 (11.7) 131,481 10.8
Inc/(dec) in inventory (6,486) (4,383) 48.0 (5,579) 16.3
Material costs (12,566) (12,334) 1.9 (12,332) 1.9
Personnel costs (65,364) (61,301) 6.6 (56,907) 14.9
Contractual expenses (10,917) (12,341) (11.5) (9,645) 13.2
Overburden removal (6,741) (7,326) (8.0) (4,363) 54.5
Other overheads (15,034) (19,175) (21.6) (17,882) (15.9)
Operating profit 28,617 48,146 (40.6) 24,773 15.5
OPM (%) 19.6 29.2 (954) bps 18.8 80 bps
Depreciation (3,872) (5,356) (27.7) (5,734) (32.5)
Interest (102) (126) (18.9) (83) 23.4
Other income 20,929 20,714 1.0 17,942 16.6
PBT 45,571 63,378 (28.1) 36,898 23.5
Tax (14,703) (18,582) (20.9) (11,132) 32.1
Effective tax rate (%) 32.3 29.3   30.2  
Adjusted PAT 30,869 44,796 (31.1) 25,766 19.8
Adj. PAT margin (%) 21.2 27.1 (597) bps 19.6 159 bps
Extra ordinary items (88) (103) (14.9) 165 (153.1)
Reported PAT 30,781 44,693 (31.1) 25,931 18.7
Ann. EPS (Rs) 19.5 28.4   (31.1) 16.3   19.8
Source: Company, India Infoline Research

Higher volumes led to an outperformance in topline

Revenue of Rs145bn was 10.8% higher on a yoy basis, but lower by 11.7% on a qoq basis. It was higher than our estimate of Rs142bn led by higher volumes. Coal off take during the quarter was higher by 8.5% on a yoy basis. Production too remained strong for the quarter at 89.1mn tons, higher by 10.9% on a yoy basis. We had estimated coal offtake for the quarter at 98.7mn tons. Realisations for the quarter stood at Rs1,432/ton marginally lower than our estimate of Rs1,440/ton and lower by 1.9% qoq. The decline in realizations was largely due to a decline in prices of e-auction and washed coal sales. E-auction realizations for the quarter declined 10.9% qoq to Rs2,282/ton on account of a decline in global coal prices. A sharp decline in global coal prices over the last six months led to a decline in e-auction prices, which are linked to landed prices. Washed coal prices too were lower on a qoq basis at Rs2,085/ton. Share of e-auction sales of total offtake declined from 11.9% in Q1 FY13 to 11.5% in Q2 FY13. However, FSA prices were higher on a qoq.


Sales analysis

Q2 FY13  Q1 FY13 % qoq Q2 FY12 % yoy
Sales (mn tons) 101.7 113.0 (10.0) 93.7 8.5
FSA 85.7 95.0 (9.7) 78.5 9.2
E-auction 11.7 13.5 (13.6) 11.2 4.5
Washed coal 3.2 3.3 (0.3) 3.3 (2.7)
Realisation (Rs/ton) 1,432 1,460 (1.9) 1,403 2.1
FSA 1,287 1,267 1.6 1,225 5.0
E-auction 2,282 2,561 (10.9) 2,435 (6.3)
Washed coal 2,085 2,315 (9.9) 2,262 (7.8)
Source: Company, India Infoline Research

EBIDTA/ton declines qoq due to higher employee and stores costs

CIL reported an operating profit of Rs28.6bn, which was higher by 15.5% yoy, but lower than our estimate of Rs30.6bn. CIL’s operating margin expanded by 80bps yoy, but shrunk 954bps qoq. The expansion in margins on a yoy basis was on account of higher realizations. Production costs per ton too increased 1.1% yoy and 11.3% qoq to Rs1,161 led by higher employee costs and an increase in per ton costs of stores and spares expenses. Employee costs for the quarter increased 6.6% on a qoq basis to Rs65.4bn, which was a negative

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