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This Maharatna Stock's PAT grew 179% YoY, 'Accumulate' With Rs. 255 Target Price: Prabhudas Lilladher
Renowned brokerage firm Prabhudas Lilladher suggests investors 'accumulate' the stocks of Coal India. The PSU company's overall volumes grew 10.7% YoY to 177.7mnt. Aided by a 46% increase in other income, its PAT grew 179% YoY and grew 32% QoQ at Rs. 88.6bn.
Target Price & Financial Result
The Current Market Price (CMP) of Coal India is Rs. 220. Prabhudas Lilladher has estimated a Target Price for the stock at Rs. 255. This stock has the potential to give a 15.90% return, in the upcoming 1 year. This is a large-cap stock with a market capitalization of around Rs. 134,717 crore.
| Stock Outlook | |
|---|---|
| Current Market Price (CMP) | Rs. 220 |
| Target Price | Rs. 255 |
| Potential 1 year return | 15.90% |
| 52 week high share price | Rs. 226.80 |
| 52 week low share price | Rs. 132.75 |
Coal India's posted back to back strong set of earnings for Q1FY23 on back of strong realisations in FSA (despite reduced volumes to non-power sector) and E-auction. The company Reported EBITDA grew 153%/35% YoY/QoQ to Rs. 122.5bn, ahead of our/consensus estimates (CE) of Rs. 81.4bn/ Rs. 82.5bn. Its adjusted EBITDA grew 74%/2.5% YoY/QoQ to Rs. 127.6 bn. However, on a quarterly basis, the growth in Adj. EBITDA is lower due to high stripping cost in Q4FY22 at Rs. 33.9bn.
Prabhudas Lilladher: Advantages Of The Stock
"Coal India displayed strong performance on off-take and FSA realisations over last one year. Delay in increase of FSA prices (85% total volumes) were more than offset by better coal grade management (resulting in higher FSA realisations) and strong E-auction realisations in wake of robust global prices. Investors argue that Coal India's costs are understated as wage revision is pending for non-executive employees (94% of total headcount) since July'21, overlooking the fact that FSA prices are also not increased for last four and half years. Usually, upward revision in wages is followed by hike in FSA prices. We increase our FY23e/FY24e EBITDA estimates of Coal India by 18%/12% on account of higher FSA and E-auction realisations. Maintain Accumulate rating with revised TP of Rs. 255 (earlier Rs. 220) based on EV/EBITDA of 2.5x FY24e," stated Prabhudas Lilladher.
Company portfolio: Coal India
Coal India Limited (CIL) the state-owned coal mining corporate came into being in November 1975. With a modest production of 79 Million Tonnes (MTs) at the year of its inception CIL, today is the single largest coal producer in the world and one of the largest corporate employer with manpower of 248550 (as on April 1, 2022). CIL functions through its subsidiaries in 84 mining areas spread over 8 states of India. The company's FSA volumes grew 20.6% to 154mnt while E-auction/washed coal volumes fell 30.7%/2.6% YoY at 21mnt/2mn. Additionally, its FSA realisations grew 3.5% YoY (down 2% QoQ) at Rs. 1,443.
Disclaimer
The above stock was picked from the brokerage report of Prabhudas Lilladher. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.
