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Operational performance in line; outlook bright

* 4QFY24 revenue stood at INR374b (-2% YoY/+4% QoQ), in line with our est. of INR376b. Blended ASP was INR1,699/t (-9% YoY/-2% QoQ), largely in line with our estimate.

* Adj. EBITDA (net of OBR) stood at INR98b (+14% YoY/-17% QoQ) in 4Q, in line with our est. of INR95b. EBITDA/t stood at INR488 (+6% YoY/-22% QoQ), vs. our est. of INR472, as lower costs led to improvement in operating performance.

* APAT stood at INR87b (+26% YoY/-14% QoQ) vs. our est. of INR68b. The beat was due to a change in OBR accounting. The company in Feb’24 approved the change in accounting policy on stripping activity, which the group was consistently following in the case of opencast mining with a rated capacity of 1MTPA or more. In 4Q, the company provided for the impact of this change and restated previous financials.

* In 4Q, production stood at 242mt (+8% YoY/+22% QoQ) and dispatches came in at 201mt (+8% YoY/+5% QoQ). SECL/MCL led the pack with dispatches of 48mt/53mt, representing ~50% of total dispatches.

* Apart from NCL and WCL, all the other subsidiaries saw production growth YoY, with ECL clocking the highest sales growth of +55% YoY in 4Q.

* FSA realization came in as expected at INR1,536/t (-1% YoY/flat QoQ) in 4Q. E-auction volumes stood at 23mt vs. 32mt. E-auction premium in 4Q stood at 66% (higher than our est. of 53% and lower than 117% premium in 3Q).

* COAL declared a final dividend of INR5 per share, taking the total dividend for FY24 to INR25.5 per share.

* In FY24, revenue stood at INR1,423b (+3% YoY), adj. EBITDA came in at INR418b (+3% YoY), and APAT stood at INR374b (+18% YoY). Production/dispatches grew 10%/6% YoY to 774mt/753mt. The blended ASP declined 6% YoY to INR 1734/t in FY24.

Valuation and view

* COAL supplies ~90% of its production to the power sector (including CPPs) and thermal power accounts for +80% of total power generated in India.

* To meet the increasing coal requirements of the power sector, COAL has made a long-term commitment via FSA agreements and BLCs. It targets to achieve a production of 838mt in FY25, with dispatches under e-auction at ~15% of total volumes.

* With a robust volume outlook, healthy e-auction premiums, and lower costs, the outlook for COAL remains positive. We maintain our revenue/EBITDA estimates for FY25/FY26. The stock is trading at 4.4x FY26E EV/EBTIDA. We reiterate our BUY rating with a revised TP of INR530 per share, valuing the stock at 5.3x FY26E EV/EBITDA.

* COAL remains our top pick in the metals and mining sector.

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