Prabhudas Lilladher is bullish on Coal India and has recommended accumulate rating on the stock with a target of Rs 418 in its May 29, 2014 research report.
"Adjusted for one-time provision of Rs8.8bn in relation to dues in dispute with NTPC, Coal India (CIL) reported PAT ahead of our expectation. Despte sharp run-up in the stock price during last three months, we continue to maintain our positive stance on the stock given its structural play on reforms to be undertaken by new government towards augmenting the production and off-take. The reforms under consideration include allowing CIL to set up its own dedicated rail network, exclusive window for time-bound clearance of CIL projects, setting up committee having balanced representation from state as well central level authorities to expedite the large coal evacuation rail projects. Given this backdrop, we reiterate our Accumulate rating with TP of Rs418, EV/EBITDA of 7x FY16E."
"Despite flat volumes and steep rise of 70 percent in OBR adjustment, total cost/t (adjusted for one‐time provision) rose meagre 1.7 percent YoY to Rs1081 (PLe: Rs1088) due to 6 percent fall in employee cost. On the similar lines, cash cost (excl. provision and OBR adj)/t rose hardly 0.5 percent YoY to Rs961, significantly lower than our estimate of Rs1017. EBITDA fell 2.2 percent YoY to Rs59.8bn, ahead of our expectation of Rs57.1bn. CIL reported other income well ahead of our estimate due to write back of prior year provision/liabilities. However, this was partially negated by higher than expected tax rate at 35.8 percent against our expecation of 33 percent. PAT before exceptional items grew 7 percent YoY to Rs50bn (PLe:Rs47bn). Accumulate Coal India with a target of Rs 418," says Prabhudas Lilladher research report.
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