Buy This Maharatna Stock For Potential Upside Of 24% In A Year: ICICI Direct

ICICI Direct in its recent report has given a 'Buy' call on the stock of Coal India for the target price of Rs. 275 per share. The target period for the 'Buy' call is 12 months. So considering the current market price of Rs. 221.65, investors can get a potential return of 24%. The recommendation is precisely given after the company's Q1Fy23 results.

Coal India Q1Fy23 results:

Operational performance of the company during the review period had been healthy.The company reported offtake volume of 177 million tonnes (MT), up 11% YoY but down 2% QoQ. FSA sales volume for the quarter was at 154 MT, up 21% YoY, 3% QoQ while FSA realisation for the quarter was at Rs. 1443/tonne, up 3%YoY but down 2% QoQ. This was largely in line with the brokerage's estimate. E-auction volume for the quarter were at 21 MT, down 30% YoY, 24% QoQ, while E-auction realisation for the quarter was at Rs. 4340/tonne, up 177% YoY, 78% QoQ, much higher than the brokerage's estimate.

"For Q1FY23, CIL reported consolidated topline of Rs. 35092 crore, up 39% YoY and 7% QoQ. Consolidated
EBITDA for the quarter was at Rs. 12251 crore (up 153% YoY, 35% QoQ), significantly higher than our estimate of Rs. 8436 crore. Consolidated EBITDA
margin for the quarter was at 34.9% compared to 19.2% in Q1FY22 and 27.8% in Q4FY22 (our estimate of 26.0%). EBITDA/tonne for the quarter was at Rs. 690/tonne compared to Rs. 302/tonne in Q1FY22 and Rs. 504/tonne in Q4FY22 (our estimate of Rs. 475/tonne). Ensuing consolidated PAT for the
quarter was at Rs. 8834 crore, up 178% YoY, 32% QoQ, significantly higher than our estimate of Rs. 6013 crore", adds the brokerage firm.

 

Target price and valuation:

The brokerage values CIL at Rs. 275, 4.5x FY24E EV/EBITDA. The stock in the last 1-year has climbed by around 53%.

Key triggers for future price performance:

Over FY22-24E, the brokerage expects CIL's consolidated topline to grow at a CAGR of 5.7% while consolidated EBITDA and consolidated PAT are expected to register a CAGR of 14.7% and 14.6%, respectively. Also, we expect CIL to report consolidated EBITDA margins of 30.3% for FY23E
and 26.5% for FY24E (22.5% for FY22), notes the brokerage.

 

Disclaimer:

The stock has been recommended as a Buy by the brokerage firm. Readers should not construe the story as an investment advice into the stock and should do their own due diligence before betting on any market linked security.

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