Update on Coal India Ltd By Motilal Oswal
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EBITDA miss on higher RM and contractual costs
Valuations attractive; dividend yield at 11%
COAL posted a strong sequential rebound in margin in 3QFY22, though it missed our estimate due to higher than expected RM costs and contractual expenses.
We expect profitability to recover further in 4QFY22, driven by strong e-auction premiums
Operating profit jumps on higher offtake
Revenue rose 20% YoY and 22% QoQ to INR284b, broadly in line with our estimate at INR280b
Adjusted EBITDA (excluding OBR) grew 26% YoY and 84% QoQ to INR73.9b (below our estimate of INR95.5b). The jump in EBITDA was on the back of volume growth, led by a 17% YoY increase in FSA offtake.
Cash costs (excluding OBR) rose 4% YoY to INR1,071/t, higher than our estimate of INR941/t. Cash costs were impacted by higher inventory release/cost of raw material. Employee cost was marginally below our estimate, although higher on a YoY basis.
PAT grew 48% YoY and 55% QoQ to INR45.6 (below our estimate of INR60b). The miss at the PAT level narrowed due to lower tax.
Dispatches in 3QFY22 rose 13% YoY to 174mt, in line with provisional estimate. Production grew 4% YoY to 164mt, which compares to provisional estimate of 157mt.
FSA volumes rose 17% YoY to 145mt (est. 142mt). FSA realization was broadly unchanged YoY and QoQ at INR1,370/t (in line).
E-auction volumes and realization/t were in line with our estimates at 26mt and INR1,947, respectively.
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