Coal India Ltd (Q4 FY13)

India Infoline News Service | Mumbai |

Realisations for the quarter increased by 6.6% qoq to Rs1,532/ton against our expectation of Rs1,450. We believe the outperformance would be due to year end incentives received from power companies as e-auction and washed coal prices are lower on a qoq basis.

CMP Rs313, Target Rs348, Upside 11.0%

  • Revenue of Rs199bn was higher than our estimate on the back of strong realizations and incentives received from power producers
  • Offtake during the quarter increased by 5.8% yoy to 129.9mn tons due to an increase in availability of rakes; Production was flat at 143.3mn tons
  • Realisations for the quarter increased by 6.6% qoq to Rs1,532/ton against our expectation of Rs1,450. We believe the outperformance would be due to year end incentives received from power companies as e-auction and washed coal prices are lower on a qoq basis.
  • EBIDTA/ton jumped from Rs356 in Q3 FY13 to Rs471, higher than our estimate due to lower social overheads and higher realisations
  • PAT increases 23.2% qoq and 36.1% yoy to Rs54bn led by a 61.6% jump in operating profit
  • Upgrade to BUY with a revised 9-month price target of Rs348. 
Result table
(Rs mn) Q4 FY13 Q4 FY12 % yoy Q3 FY13 % qoq
Net sales 199,046 194,190 2.5 173,250 14.9
Inc/(dec) in inventory 8,643 12,566 (31.2) (2,713) (418.6)
Material costs (20,247) (17,320) 16.9 (15,475) 30.8
Personnel costs (74,693) (90,688) (17.6) (63,050) 18.5
Contractual expenses (19,903) (15,822) 25.8 (14,858) 34.0
Overburden removal (8,880) (19,086) (53.5) (9,070) (2.1)
Other overheads (22,776) (25,985) (12.4) (25,201) (9.6)
Operating profit 61,191 37,856 61.6 42,883 42.7
OPM (%) 30.7 19.5 1125 bps 24.8 599 bps
Depreciation (4,698) (4,103) 14.5 (4,204) 11.7
Interest (127) (185) (31.2) (96) 32.5
Other income 22,065 23,280 (5.2) 23,605 (6.5)
PBT 78,431 56,847 38.0 62,188 26.1
Tax (24,508) (17,221) 42.3 (18,387) 33.3
Effective tax rate (%) 31.2 30.3
29.6
Adjusted PAT 53,923 39,626 36.1 43,801 23.1
Adj. PAT margin (%) 27.1 20.4 669 bps 25.3 181 bps
Extra ordinary items 216 508 (57.5) 151 43.6
Reported PAT 54,139 40,134 34.9 43,951 23.2
Ann. EPS (Rs) 34.1 25.1   36.1 27.7   23.1
Source: Company, India Infoline Research

Topline growth aided by incentives received from power producer
Coal India’s revenue increased 14.9% qoq and 2.5% yoy to Rs199bn which was higher than our estimate of Rs188bn. The increase in revenue was led by higher than expected realisations. Coal offtake increased 5.8% yoy to 129.9mn tons on account of increased availability of rakes due to better co-ordination with the railways. Production during the quarter was marginally lower by 0.9% yoy to 143.3mn tons. The company had lost some production due to strike at its mines. For the full year, the company managed to produce 452.2mn tons of coal compared to 435.8mn tons in FY12. The growth in offtake was higher at 7.5% yoy due to liquidation of inventory, which was aided by 10.7% increase in availability of rakes.

Realisations for the quarter stood at Rs1,532/ton quite higher than Rs1,438 registered in Q3 FY13. It was quite higher than our estimate of Rs1,450/ton. We believe the outperformance would be due to year end incentives received from power companies as e-auction and washed coal prices are lower on a qoq basis . Both e-auction and washed coal prices declined by 19.1% yoy and 6.8% yoy, respectively due to a decline in global coal prices.

Volume mix
  Q4 FY13 Q4 FY12 % yoy Q3 FY13 % qoq
Sales 129.9 122.8 5.8 120.5 7.8
FSA 109.5 102.1 7.2 107.0 2.3
E-auction 14.9 14.7 1.4 10.5 42.2
Washed coal 3.6 4.2 (13.4) 4.0 (8.1)
Realisation 1,532 1,581 (3.1) 1,438 6.6
FSA 1,403 1,366 2.7 1,229 14.2
E-auction 2,307 2,852 (19.1) 2,818 (18.1)
Washed coal 2,264 2,428 (6.8) 2,496 (9.3)

EBIDTA/ton jumped due to lower social overheads and higher realisations
Operating profit for the quarter spiraled by 61.6% yoy and 42.7% qoq to Rs61.1bn, higher than our estimate of Rs55bn. CIL’s operating margin expanded by 11.2 ppts and 6 ppts on the back of strong realizations and lower costs. Operating costs per ton of coal decreased 16.6% yoy and 1.9% qoq to Rs1,061/ton on account of lower social spend and lower overburden removal provision. Stores and spares per ton of coal jumped due to an increase in diesel prices. We were quite surprised by the 18.5% qoq jump in employee costs. The management indicated that this is a yearly phenomenon in the last quarter. The jump in volumes produced along with higher realizations led to a jump in EBIDTA/ton from Rs356 in Q3 FY13 to Rs471.

Performance analysis

Q4 FY13 Q4 FY12 % yoy Q3 FY13 % qoq
Production (mn tons) 143.3 144.6   (0.9) 117.4   22.1
Dispatches (mn tons) 129.9 122.8   5.8 120.5   7.8
Realisation (Rs/ton) 1,532 1,581   (3.1) 1,438   6.6
Costs/ton (Rs/ton) 1,061
BSE 271.05 7.95 (3.02%)
NSE 271.00 8.15 (3.10%)

***Note: This is a NSE Chart

 

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