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You are here : IndiaNotes >> Research & Analysis >> Companies >> Coal India Ltd. >> Research

Coal India: Volume growth accelerating, concerns are behind; Buy

Motilal Oswal | 21 Dec, 2017  | Follow Author | Add to my Favourites 
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  • Despite a steep increase in cost on account of the wage hike, we expect adjusted EBITDA CAGR of 15% to INR197b over FY17-19. Growth in EBITDA is driven by annual volume growth of ~7%, operating leverage and other operating income.

  • EPS is expected to increase at a CAGR of 18% to INR20.7/share over FY17-19. At 90% payout, the dividend yield will be ~6% at CMP.

  • Concerns around grade slippage, e-auction price decline, deceleration in volume growth and wage hikes are now behind. Volume growth is accelerating, which will also drive operating leverage gains. Various cost initiatives like closing of underground mines, VRS and overtime compensation can drive upside to our estimates.

  • The stock trades attractive at 6.8x FY19E EV/EBITDA. The TP is INR335/share. based on 8x FY19E EV/EBITDA. Buy.


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About Motilal Oswal

Motilal Oswal was founded in 1987 as a small sub-broking unit, with just two people running the show. Today it has a 2000 member team with a networth of Rs7 bn and market capitalization as of March 31, 2008 at Rs19 bn.

 

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Disclaimer: The author has taken due care and caution to compile and analyse the data. The opinions expressed above are only the views of the author, and not a recommendation to buy or sell. Neither the author nor IndiaNotes.com accept any liability whatsoever arising from the use of any of the above contents.




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