Buy Coal India, target Rs 359: Emkay Global Financial Services

Emkay Global Financial Services has a buy call on Coal India Ltd. with a target price of Rs 359. The current market price of Coal India Ltd. is Rs 290.35 Time period given by the brokerage is a year when Coal India Ltd. price can reach defined target. Coal India Ltd., incorporated in 1973, is a largecap company with a market cap of Rs 181442.57 crore.

Investment rationale by Emkay Global

 Revenue stood at Rs269bn (+9%/+24% yoy/qoq) significantly above our and street's estimates primarily due to better realization. Blended realization rises by 5%yoy toRs1573/tn while offtake rose by 5%yoy to 159mt supported by higher FSA dispatches.


 EBITDA/tn, post adjusting OBR and one-time non-recurring employee expense of Rs74bn towards increase in gratuity ceiling from Rs1mn to Rs2mn, stands at Rs633/tn(+97%/+74% yoy/qoq). EBITDA margin improved by 1450bps yoy to 28% (+683bps qoq)

 Adjusted PAT came in at Rs87bn (+219%/+189% yoy/qoq). Tax expense included deferred tax credit w.r.t impact of gratuity celling increase in all subsidiaries hence tax expense stands negative Rs1.4bn.

 Expect volume and prices to remain strong. Commissioning of railway lines, full impact of evacuation charges, surface transportation will have positive impact. Employee cost related issues are behind. Retain Buy with target price of Rs 359.