Coal India Q4 Review: Analysts Up Targets On Profit Beat, Shares Volatile
“Reasonable” valuations and a dividend yield prompted most analysts to remain optimistic on Coal India after Q4 results.
Analysts raised target prices for Coal India Ltd. after its operating income beat estimates led by better fuel supply agreement realisation, and on improved revenue outlook aided by higher e-auction prices and volumes.
The world’s largest miner of the fossil fuel saw its net profit rise 46% year-on-year in the quarter ended March 31, also beating forecasts. That was helped by a decline in finance costs and a jump in other income. Offtake rose 9.3% over the year earlier to 180.25 million tonnes.
Besides, “reasonable” valuations and a dividend yield prompted most analysts to remain optimistic on the state-owned miner.
Of the 27 analysts tracking Coal India, 22 maintain a ‘buy’, two suggest a ‘hold’ and three recommend a ‘sell’, according to Bloomberg data. The average of the 12-month consensus price target implies an upside of 17.1%.
The shares, however, were volatile in early trade on Thursday. The stock gained as much as 2.93% and then fell 1.63%. It was trading 0.1% up as of 9:50 a.m.
Here’s what analysts have to say about Coal India’s Q4 FY22 results:
Credit Suisse
Maintains ‘outperform’; hikes target price to Rs 250 from Rs 225 apiece.
Ebitda beat on the back of better fuel-supply agreement realisation.
Absolute demand level now cooling off, likely easing pressure on power generators.
Expects an increase as recent months saw more than 100% premiums.
Wage hikes and FSA price changes are key events.
BoFA Securities
Reiterates ‘buy’, ups target price to Rs 218 from Rs 214 apiece.
Coal India’s Q4 above BofA estimates on higher realisations.
Receivables (a key concern area) declined by Rs 1,630 crore QoQ, which is encouraging.
Thermal power generation flat YoY; coal inventories low.
Dividend yield of 11%; receivables decline is a positive.
Retains ‘buy’ on undemanding valuations, dividend yield.
Citi
Maintains ‘neutral, raises target price to Rs 180 from Rs 160 apiece.
Q4 e-auction realisations below expectations, FSA ahead.
Ebitda 25% below estimates on high overburden—also called waste or spoil, is the material that lies above an area that lends itself to economical exploitation—removal provision.
With ESG concerns, a significant rerating might not be easy.
Raises FY23/24 EPS by 9% on higher e-auction prices and slightly higher volumes.
Jefferies
Retains ‘hold’, hikes target price to Rs 175 from Rs 160 apiece.
Coal India’s Q4 cash Ebitda above Jefferies’ estimates led by better-than-expected FSA realisation.
A big working capital release drove strong cash flows in FY22.
Coal India’s top line outlook has improved, led by a pickup in volumes and rising e-auction prices.
Higher staff cost due to workers’ wage revision should pose a headwind.
Its 6x FY24E price-to-equity is reasonable, but long-term outlook remains uncertain.