7 COALINDIA share price target reports by brokerages below. See what is analyst's view on COALINDIA share price forecast, rating, estimates, valuation and prediction behind the target. You may use these research report forecasts for long-term to medium term for your investment or trades in 2020.
COAL underperformed Nifty by a wide margin of 28%/23% over One-year/six- month. The underperformance has been largely due to unabated stock supply by its promoter, Govt of India. Resultantly, valuations fell to all-time low with EV/EBITDA of 2.5x and P/E of 5.3x FY21E, pushing dividend yield to near- highs of 9%. Regular stock supply restrains us to upgrade the stock despite attractive valuations and better earnings outlook. Hence, we maintain Accumulate with TP of Rs225 (earlier Rs230), EV/EBITDA of 4x FY21E.
Over the medium term, we expect volumes to continue growing at 5-6%. Besides, COAL has managed to keep cost under control on the back of productivity measures and shutting down of old mines. Ongoing efficiency measures, along with growth in volumes, should drive 4% adj. EBITDA CAGR over FY19-21 – despite a high base of FY19. The stock trades attractively at ~3x FY21E EV/adj. EBITDA (v/s historical average of 7x), P/E of 7-8x (v/s average of ~14x) and offers a dividend yield of ~9%. We value the stock on 4.5x FY21E EV/EBITDA at INR278/sh. Maintain Buy.
Stock has underperformed Nifty by a wide margin of 30%/20% on One- year/six-month basis. The underperformance has been largely due to unabated stock supply by its promoter (Govt of India). This has put valuations in an attractive territory with EV/EBITDA of 3.0x and P/E of 6.0x FY20E. Admittedly, the stake sale by Govt would continue to remain headwind on the stock performance. However, the current valuations with dividend yield at 7%+ prices in the concerns associated with sub-optimal volumes and stake sale. Hence, we maintain Accumulate with TP of Rs235.
Production woes likely over; maintain ‘BUY’. We expect CIL’s production/offtake volume to show an uptick Q3FY20 onwards mainly due to a pick-up in business at MCL and SECL. While BCCL remains a concern, we do not believe our FY20E offtake of 638mt is at risk. Maintain ‘BUY/SO’with a TP of INR235/share. The stock is trading at 6.8x FY21E EPS.
We highlight India’s divergence from other major coal-consuming economies (US, China) in terms of coal consumption. In our view, from India’s standpoint, coal is here to stay, despite increasing renewable generation (unless storage technology develops). At current price, COAL’s market cap = 12 years of its discounted FCF. We reiterate our Buy rating with a TP of INR264 (36% upside).
We believe that CIL will achieve production growth of 4.5% YoY in FY20E driven by a spurt in H2FY20. FSA realisation too is likely to be stable as more coal is being diverted to the non-power segment (which fetches a premium). Maintain ‘BUY/SO’ with an unchanged TP of INR235 on December 2020E EPS, implying an exit 8.5x FY21E EPS.
The stock trades attractively at ~3x FY20E EV/adj. EBITDA (v/s historical average of 7x), P/E of 7-8x (v/s average of ~14x) and offers dividend yield of ~9-10%. We value the stock on 4.5x (v/s 5x earlier) FY20E EV/EBITDA at INR278/share. Maintain Buy.
Marginally short of estimates; Beaten down valuations drive upgrade Stock has fallen sharply due to unabated stock supply by Govt of India and weak operational performance. This has made stock attractive on valuations with EV/EBITDA of 3.0x and P/E of 6.3x FY20E. Hence, we upgrade the stock to Accumulate with TP of Rs235.
We expect average e-auction realizations to decline by ~INR400/t in FY20 on the back of higher domestic availability and lower international coal prices. However, high natural attrition should continue driving operating efficiencies. This, along with continued growth in volumes (our est. 5-6%), is likely to drive 5% EPS CAGR over FY19-21 – despite the high base of FY19. We note that COAL’s FY19 EBITDA has doubled from FY17 levels. Despite this, the stock has witnessed significant de-rating over the last 2-3 years. The stock trades attractively at ~4x FY20E EV/adj. EBITDA (v/s historical average of 7x), P/E of 8-9x (v/s average of ~14x) and offers a dividend yield of ~8%. We value the stock on 5x FY20E EV/EBITDA at INR310. Maintain Buy.
Coal India has guided for sales volume growth of 8.7% during FY20E. However, for the first couple of months of FY20, CIL’s production has witnessed a flattish trend. Hence, going forward, the trend of CIL’s volumegrowth is likely to remain a key monitorable. We keep intact our estimates and maintain our HOLD rating on the stock with a target price of Rs 275.
COAL needs to spend c40+% (FY15-21E) of OCF on capex, yet EBIT growth is mainly driven by price hikes. COAL is a cash (dividend) cow as it pays all FCF after capex as dividends. In our view, this is the only benefit that minority shareholders get. We thus believe a realistic way to value COAL is to focus on its dividend paying potential, hence we use DDM to value COAL. We maintain our SELL rating on COAL with a TP of Rs199.
Volumes growth continued to remain weak due to structural issues related toland acquisition, logistics and statutory clearances. Volumes for Apr’19 grewby 2.6% YoY, however, we factor in 5.3%/5.5% growth in FY20e/FY21e. Given the weak outlook on volumes and deteriorating B/S (resulting in dividend cuts), we reiterate Hold with TP of Rs265, P/E of 9.8x FY21E.
Coal India’s (CIL) shipments in FY19 surpassed the 600mt mark for the first time ever; the 4.7% YoY increase was broadly in line with our expectation. Key highlights: 1) production & sales in March were at 79.2mt and 59.6mt, respectively; 2) the eagerly awaited Tori-Shivpur line was completed in September 2018 & is now operational; and 3) pit-head inventory grew to 53.8mt at FY19 end & should improve coal availability hereon. Going ahead, we expect e-auction premium to dip given the inventory buildup in the upcoming summer months. Maintain ‘HOLD’ with INR243 target price. The stock is currently trading at 9.6x FY21E EPS.
Valuations at 50% discount to its averages and dividend yield at 9-10%: Coal India (COAL) has witnessed unprecedented de-rating over the past 2-3 years. Its stock is currently trading at 7.4x P/E v/s average of 14x (Exhibit 1:), despite strong RoE at 35-40% (Exhibit 2:) and 3.5x EV/EBITDA v/s average of 7.2x (Exhibit 3:). The company continues to generate strong free cash flows (Exhibit 4:), which allows it to distribute dividends in excess of 100% of earnings (Exhibit 5:). Currently, dividend yield has increased to 9-10% with current valuations at 45-50% discount to long-term averages, which is a typical trait of a commodity stock at the peak of an earnings cycle. But, the same is perplexing in the case of COAL as 81% of its revenue is non-cyclical. Selling price of FSA coal is currently at 50% discount to E-auction prices i.e. market price, which means there is still significant pricing power left with the company. Only 19% of the revenue is subject to the market price of coal and is cyclical in nature. If we were to model historically the lowest E- auction price of INR1,536/t (in FY17), the stock would still be trading at 4.3x EV/EBITDA, P/E of 9.2x and dividend yield of ~8%, which means valuations would still range between 35-40% discount to historical averages.
Coal India reported muted e-auction volumes for Q3FY19. E-auction volumes were at 14.7 MT (down 44% YoY, 17% QoQ). Hence, we downward revise e-auction volumes of FY19E to 67.5 MT (from 75 MT earlier) and to 65 MT for FY20E (from 75 MT earlier). On account of the subdued trend in sales volumes over the last couple of months, we downward revise our FY19E sales volume to 610 MT (from 625 MT earlier) and to 625 MT for FY20E (from 650 MT earlier). On account of the muted trend witnessed in higher margin e-auction volumes, we downward revise our EV/EBITDA multiples. We now value the stock at 5.5x FY20E adjusted EV/EBITDA and arrive at a target price of Rs 225. We have a HOLD recommendation on the stock.
COAL’s Revenue/EBITDA/PAT of Rs 250.5/67.9/ 45.7bn were well ahead of street estimates of Rs 238.2/50.1/38.1bn, driven by 1) good FSA realization at Rs 1,334/t (+2% q/q, +13% y/y) 2) strong e-auction realization at Rs 2,892/t (+10% q/q, +43% y/y & 113% premium to FSA price vs 98/69% in 2QFY19/3QFY18) 3) in-line costs 4) operating leverage due to higher sales volume at 154 mt (+12% q/q). The strength in eauction prices (despite muted international coal price), is because of lower volumes in the segment in 9MFY19E (-33% y/y); as volumes pick up, prices would trend lower. COAL trades at 3.6/7.8x FY20E EVEBITDA/PE, ~ 50+% discounts vs 3 yr avg. These low valuation multiples conceal more than they reveal. COAL needs to spend c45% (FY15-21E) of OCF on capex, yet EBIT growth is mainly driven by price hikes. COAL is a cash (dividend) cow. In our view, this is the only benefit that minority shareholders get. We thus believe a realistic way to value COAL is to focus on its dividend paying potential, hence we use DDM. We maintain our SELL rating on COAL.
COAL has managed to keep cost under control despite inflationary pressure from the diesel price increase. Cash cost (ex-OBR) declined by ~5% YoY in 9MFY19. While at the same time, ~10% YoY increase in realization (price hike and increase in evacuation charges) boosted earnings. Adj. EBITDA and PAT doubled YoY in 9MFY19. Inventory levels at power plants have started to improve, which should reduce pressure on COAL to give priority supply to the power sector and should thereby aid e-auction volumes. Our adj. EBITDA estimate is upgraded by ~14% to INR275b for FY19 due to change in provision accounting. PAT estimate is raised by ~6% to INR169b due to better-than-expected performance in 3Q. The stock trades attractively at ~4x FY20E EV/adj. EBITDA. We value the stock on 6.5x FY20E EV/EBITDA at INR338/sh. Maintain Buy.
Coal India (COAL) reported Q3FY19 earnings marginally above our estimates on the back of better than expected FSA realisations. We note that company changed accounting for provisions related to quality variance by adjusting from revenue against earlier practice of providing as cost. Accordingly, revenues for H1FY19 were revised lower by Rs5bn to account for grade slippage. Against the same, company recognized credit of Rs24mn in the quarter. Hence, we keep our estimates unchanged for FY20e and FY21e as volatile grade and lower E-auction volumes would offset higher pre-grade adjustment realisations. Volumes growth continued to remain dismal due to structural issues related to land acquisition, logistics and statutory clearances. We factor in 4.3%/5.0%/5.5% growth in FY19e/FY20e/FY21e. Given the weak outlook on volumes and deteriorating B/S (resulting in dividend cuts), we reiterate Hold with TP of Rs250, P/E of 10x FY20E.
SOURCE: Data from D'Market via Quandl. Intraday data delayed 15 minutes.
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