Maintain Buy on Coal India - Motilal Oswal

COAL INDIA 3QFY11: EBITDA marginally below est on lower e-auction prices; Marginal cut in estimates; Maintain Buy

Coal India reported 3QFY11 net revenues of Rs127b, EBITDA of Rs33.8b and PAT of Rs26.4b.

This compares with our estimate of EBITDA of Rs35.4b (marginally below est) and PAT of Rs32.8b (lower than est). YoY comparable numbers are not available.

E-auction volumes stand at 13.3m tons in 3QFY11, vs 11m tons in 2Q; realizations stood at Rs1,811/t (vs Rs1,675/t in 2Q).

Lower other income at Rs12.9b (vs est Rs16b) and higher tax rate at 37.4% (vs est 30%) led to lower than estimated PAT.

We have cut our earnings estimates and now expect Coal India to report net profit of Rs111b (up 13% YoY) in FY12, Rs128b in FY12E (up 16% YoY) and Rs132b in FY13E (up 3% YoY). This is a downgrade of 6.5% for FY11, 0.9% for FY12 and 3.9% for FY13. Stock trades at a P/E of 14.9x FY12E and 14.4x FY13E; EV/EBIDTA of 9.6x FY12E and 8.7x FY13E. Maintain Buy with target price of Rs331 (10% upside).

Source : Equity Bulls

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