Coal India - Downgrade to ADD - Realizations to remain weak - IIFL

The negative surprise in CIL's ASP in 1QFY13 would persist in 2Q as well. Channel checks suggest that premium in e-auction is steadily declining. Impact on blended ASPs would be larger than just e-auction as ~25% of CIL's volumes are sold at market linked prices.

Estimated 1HFY13 volume growth at 7.5% YoY appears robust primarily due to base effect. Twoyear CAGR is just 1.2%. We cut our earnings estimates by 5% on lower realization estimates. In absence of volume or price drivers, there is little upside to earning estimates.

13x FY14ii EPS underscores utility like earnings trajectory; commodity price driven earnings volatility would be detrimental to multiples. We downgrade to ADD.

Source : Equity Bulls

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