Target: ₹458

CMP: ₹452.40

Coal India reported higher than estimate EBITDA ex OBR at ₹11,900 crore (CentrumE: ₹10,950 crore), up 6.2 per cent y-o-y/ up 34 per cent q-o-q and EBITDA/t declined by 2.4 per cent y-o-y at ₹624/t (CentrumE: ₹573/t). The y-o-y increase is primarily due to increase in sales volume (up 8 per cent y-o-y) partially offset by 6 per cent y-o-y fall in blended realisation.

The FSA and e-auction sales volume increased by 9 per cent y-o-y and 8 per cent y-o-y, while, realisation declined by 6.4 per cent y-o-y and 34 per cent y-o-y respectively due to higher premium in base year. Employee cost remain steady y-o-y at ₹11,500 crore; however, on per tonne basis, declined by 9 per cent y-o-y. Hence, overall CoP/t declined by 7.1 per cent y-o-y.

We incorporate higher volume by 3.5/4.5 per cent as well as lower CoP resulting in 23/28 per cent increase in FY25/FY26 EBITDA, respectively. Hence, our target price is revised upwards to ₹458/sh, valuing at 5x average FY25E/FY26E EV/EBITDA. High profitability will ensure enough cash after capex (FY24-26: FCF of Rs190-280bn/year) for higher dividend.We maintain Add rating.operating leverage.

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