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Performs well....

Coal India’s (CIL’s) Q4FY21 performance was better than our estimates. Better-than-expected realisations for both FSA as well as e-auction segment aided Q4FY21 performance. For Q4FY21, CIL reported sales volume of 165 million tonnes (MT), up 1% YoY, 7% QoQ (our estimate 164 MT). FSA sales volume for Q4FY21 was at 133 MT (down 4% YoY but up 8% QoQ). E-auction sales volume for Q4FY21 was at 29 MT (up 38% YoY, 7% QoQ). FSA realisations for Q4FY21 were at | 1392/tonne (down 4% YoY but up 3% QoQ), higher than our estimate of | 1335/tonne. E-auction realisations for Q4FY21 were at | 1752/tonne (down 17% YoY but up 20% QoQ), higher than our estimate of | 1625/tonne. For Q4FY21, consolidated revenue from operations was at | 26700 crore (down 3% YoY but up 13% QoQ), higher than our estimate of | 25646 crore. Consolidated EBITDA for the quarter was at | 6382 crore (flattish YoY, up 24% QoQ), higher than our estimate of | 5745 crore. Consolidated EBITDA margin for Q4FY21 was at 23.9% compared to 23.2% in Q4FY20 and 21.8% in Q3FY21. EBITDA/tonne for Q4FY21 was at | 387/tonne, higher than our estimate of | 350/tonne (EBITDA/tonne of | 390/tonne in Q4FY20 and | 335/tonne in Q3FY21). Ensuing consolidated PAT for Q4FY21 was at | 4589 crore (down 1% YoY but up 49% QoQ), higher than our estimate of | 3943 crore.

Model sales volume of 650MT for FY22E, 700MT for FY23E

During the first couple of months of the current fiscal, CIL registered healthy growth in offtake volume, albeit on a lower base. For the first two months of FY22 (April-May 2021), CIL reported production volume of 84 MT, up 2.6% YoY while offtake volumes during the period were at 109 MT, up 37.9% YoY. Going forward, for FY22E, we model sales volume of 650 MT while for FY23E we model sales volume of 700 MT.

EBITDA margins to hover at ~20% for next couple of years...

We expect EBITDA margins to hover in the range of ~20% in the next couple of years. We model EBITDA margin of 20.4% for FY22E and 20.2% for FY23E.

Valuation & Outlook

CIL reported a steady set of numbers for Q4FY21. Going forward, we model sales volume of 650 MT for FY22E and 700 MT for FY23E. Furthermore, we expect EBITDA margins to hover at ~20% over the next couple of years (we model consolidated EBITDA margin of 20.4% for FY22E and 20.2% for FY23E). We continue to value the stock at 4.5x FY23E EV/EBITDA and arrive at a target price of | 165 (earlier | 140). We maintain our HOLD recommendation on the stock.

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