Weak realisations. Coal India reported weak functionality as realisation for raw coal (contributing 80% by volumes) declined to Rs 1,354/ton (-4% yoy) major to flat revenues of Rs217 billion regardless of 8.7% y-o-y development in all round dispatches in Q3FY21. Strong e-auction volumes (+177% yoy) regardless of weak premiums (25% in 3QFY21) continued to salvage earnings more than the previous couple of quarters. Sustained improvement in dispatch volumes continues to stay the essential earnings driver for CIL. Maintain ‘buy’ with revised fair worth (FV) of Rs185/share (from Rs180/share earlier).
CIL reported revenues of Rs217 billion (+1% yoy, +11% qoq), ebitda of Rs32 billion (-5% yoy, +38% qoq) and PAT of Rs30.8 billion (-21% yoy, +4% qoq) against our estimates of Rs223.8 billion, Rs32.5 billion and Rs36 billion, respectively. The income miss was largely on account of reduce blended realisations of Rs1,411/tonne (-7.4% yoy, -3% qoq) due to continued weakness in e-auction realisations at Rs1,466/tonne (-44% yoy,+2% qoq) even though the similar was off-set by substantially greater e-auction volumes of 27 million tonne (+177% yoy, +22% qoq) thereby cushioning the influence on revenues.
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Costs have been largely contained barring social overhead expenditures, though a reduce overburden provision produced very good the weakness in income functionality to provide an in-line ebitda of Rs32 billion. Higher efficient tax-price of 35% led to tax expenditures growing major to a miss in PAT estimates. Operationally, production at 157 mn tonne (+6.3% yoy) and sales at 154 mn tonne (+8.7% yoy) had previously been reported, and look optically robust on account of favorable base impact as coal demand in 3QFY20 was impacted by reduce demand.
We highlight that Coal India continues to struggle to recover piling receivables, which have reached Rs215 billion as of December 2020 from Rs144 billion as of March 2020. Management highlighted that additional enhance in receivables has largely been contained with the enterprise getting a key portion of billing from October 2020. With capex of Rs49 billion incurred in Q3FY21, money balance with the enterprise was at Rs120 billion as of December 2020.
CIL remains attractively valued at 6.6X P/E and 5.5X EV/ebitda on adjusted earnings for FY2023E. We have revised our earnings for FY2021E/2022E by +7.3% and -1.8%, respectively, to aspect greater volumes and an enhanced proportion of e-auction sales as nicely as reduce provisioning for overburden in FY2021E, partially off-set by greater interest expense. Maintain ‘buy’ rating and revise FV to Rs185/share (from Rs180/share) based on March 2023E earnings.