Coal India reported a YoY profit growth of 13% to Rs 6,800 crore, surpassing Motilal's estimate of Rs 5,000 crore, driven by strong operating performance and reduced depreciation. Ebitda also rose 11% YoY to around Rs 8,900 crore. The better-than-expected Q2 results were attributed to higher coal prices and lower employee costs. The power demand, usually peaking in May due to summer heat waves, remained elevated this year due to a drier monsoon and high economic activity. Despite being a seasonally weak quarter, strong demand from the power sector was noted. Coal India has maintained its FY24 target dispatch to the power sector at 610 million tonnes, expecting further performance improvement in the second half of the financial year.
Motilal Oswal Securities increased its Ebitda estimates for FY24/FY25 by 16%/13%, citing strong performance, improved volume outlook, e-auction premiums, and lower costs. The stock is trading at 4.1 times FY25 EV/Ebitda. The brokerage retains a BUY rating with a revised target price of Rs 380, valuing the stock at 5 times FY25E EV/Ebitda, declaring Coal India as its top pick in the mining sector.
The brokerage highlighted that Coal India's profit grew 13% YoY to Rs 6,800 crore, exceeding its estimate of Rs 5,000 crore, driven by robust operating performance and reduced depreciation. Ebitda rose 11% YoY to about Rs 8,900 crore, surpassing the brokerage estimate of Rs 5,800 crore due to lower-than-expected employee costs.
Nuvama Institutional Equities noted that Coal India delivered 11% YoY growth in Q2FY24 Ebitda, contrary to their expectations of a 6% YoY dip. This was attributed to higher-than-expected coal prices and lower-than-expected employee costs. Higher FSA prices, improved volume, increased e-auction prices, and the peaking out of costs are expected to drive Coal India's earnings in H2FY24. The brokerage revised its FY24E and FY25 Ebitda by 5% and 7%, factoring in higher e-auction prices. They value CIL at 4.5 times FY25E/26E average, revising its fair value to Rs 404 from Rs 389 earlier, excluding FY24E/25E dividend per share of Rs 30/25.
