Coal India - Earnings Set To Rise With Increasing Offtake: Systematix

Systematix Research Report

Coal India Ltd. reported Q2 FY24 production and dispatch of 157 million tonne (+13% YoY, -10% QoQ) and 174 million tonne (+12% YoY, -7% QoQ), respectively, despite the monsoon quarter.

Coal India delivered outstanding operational performance and reported record sales and production volumes for the sixth consecutive month this fiscal. In H1FY24, Coal India’s production stood at 333 million tonne, a growth of 11.3% or 34 million tonne YoY.

We believe higher volumes, improved rake availability, and growth in demand from both the power and non-regulated sectors is likely to drive margins higher, more than offsetting the impact of lower e-auction premiums compared to FY23.

We revise our FY24E/FY25E Ebitda higher by 77%/83% to factor in higher volumes, better realisations, and lower cost of production. We Coal India at five times FY25E (four timtes earlier) enterprise /Ebitda to arrive at a revised target price of Rs 394/share (Rs 157 earlier).

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