ICICI Direct has given Hold recommendation for Coal India with a target price of Rs. 140 in its research report issued on Feb 16, 2021
ICICI Direct’s research report on Coal India
Coal India (CIL) reported a mixed set of Q3FY21 numbers wherein topline and EBITDA came in line with our estimate. However, PAT came in lower than our estimate on the back of subdued other income and higher than expected effective tax rate. CIL reported sales volume of 154 million tonnes (MT), up 9% YoY, 15% QoQ (our estimate: 155 MT). Consolidated operating income for the quarter was at Rs 23686 crore, up 2% YoY, 12% QoQ (our estimate of Rs 24625 crore). Consolidated EBITDA was at Rs 5165 crore (up 4% YoY, 30% QoQ) against our estimate of Rs 5415 crore. Consolidated EBITDA margin came in at 21.8% (up 38 bps YoY, 301 bps QoQ), broadly in line with our estimate of 22.0%. EBITDA/tonne came in at Rs 335/tonne against our estimate of Rs 350/tonne (Rs 350/tonne in Q3FY20 and Rs 297/tonne in Q2FY21). Consolidated other income for the quarter was at Rs 640 crore (down 54% YoY, 40% QoQ), lower than our estimate of Rs 1025 crore. Effective tax rate came in at 35% against our estimate of 25% (26% in Q3FY20, 27% in Q2FY21). Ensuing consolidated PAT came in at Rs 3084 crore (down 21% YoY but up 4% QoQ), lower than our estimate of Rs 3922 crore.
We value the stock at 4.5x FY23E EV/EBITDA and arrive at a target price of Rs 140 (earlier Rs 130). We maintain our HOLD recommendation on the stock.