Add Coal India Ltd for the Target Rs 475 by Emkay Global Financial Services Ltd
COAL reported an in-line 1QFY27, with EBITDA at Rs143.5bn (-19.8% qoq; flat yoy) – broadly matching consensus estimates on like-for-like basis (including other income) albeit 14.7% above our estimate. While higher raw-material costs and other expenses offset the revenue growth, earnings remained resilient. Operationally, production declined 7.5% yoy to 169.6mt, though offtake grew 3.6% yoy to 198mt, supported by strong dispatches. E-auction premiums remained healthy at 47% despite accounting changes; we expect these to be broadly stable, alongside an improving e-auction mix of 13-14% over FY27-29E. Factoring in the 1QFY27 results, we continue to model a 6% offtake CAGR over FY27-29E, backed by robust power demand and likely reduction in Indonesia's coal production. We hence retain ADD and TP of Rs475
In-line earnings; cost inflation offsets revenue growth
COAL reported an in-line 1Q performance, with EBITDA at Rs143.5bn (-19.8% qoq; flat yoy) coming in 14.7% above our estimate of Rs125.1bn. On like-for-like basis (including other income), reported EBITDA was broadly in line with consensus’ expectations. EBITDA/t stood at Rs725 vs Rs751 in 1QFY26. PAT was Rs88.5bn, coming in 2.4% above consensus’ estimates, albeit down 18.3% qoq and flat yoy. Higher revenue was largely offset by a 27% yoy increase in raw material costs and a 14% yoy rise in other expenses, mainly driven by higher offtake and increase in land cess in Jharkhand. EPS stood at Rs14.4, ahead of both consensus (Rs12.2) and our estimate (Rs11.3). The company also declared a final dividend of Rs5.5/share, broadly in line with expectations.
Weak production; resilient dispatches
COAL's realizations remained resilient during the quarter, with FSA prices at Rs2,099/t in 1Q (up 1.1% yoy) and e-auction prices increasing 5.8% yoy to Rs3,085/t, resulting in a 4.0% yoy increase in 1QFY27 blended realization. On the operational front, production retracted sharply to 169.6mt in 1QFY27 (vs 239mt in 4Q; -29.0% qoq, -7.5% yoy), driven by weak sequential performance from subsidiaries such as MCL and SECL. Offtake was sequentially flat at 198mt (vs 199mt in 4Q; flat qoq, +3.6% yoy), supported by higher dispatches from MCL and WCL.
Steady e-auction premiums and volume growth support TP
COAL has continued to benefit from strong e-auction realizations over the past few quarters, with premiums consistently exceeding consensus’ expectations. However, following the accounting changes effective 4QFY26 onward, reported e-auction premiums appear optically lower at ~45% (47% in 1QFY27). We expect premiums to broadly maintain these levels, while the share of e-auction volumes improves to 13-14% over FY27-29E. Incorporating the 1QFY27 results, we continue to model a 6% offtake volume CAGR over FY27-29E, broadly in sync with the projected ~7% growth in power demand, with incremental support from a likely reduction in Indonesia's coal production target to 600mt in CY26 (vs 790mt in CY25). Accordingly, we maintain ADD and TP of Rs475.
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