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Business News/ Markets / Stock Markets/  Coal India stock spikes over 5.5% as Q3 earnings beat estimates. Is it a good time to buy?
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Coal India stock spikes over 5.5% as Q3 earnings beat estimates. Is it a good time to buy?

The company released its Q3 numbers post market hours on Monday, reporting a net profit of ₹9,094 crore, a robust 18% YoY growth. This was the highest PAT earned during the third quarter of any year since the company’s listing.

Its revenue from operations during Q3 FY2024 went up to ₹36,154 crore, marking a 3% growth over the ₹35,169 crore of the corresponding period of the previous fiscal. (Mint)Premium
Its revenue from operations during Q3 FY2024 went up to 36,154 crore, marking a 3% growth over the 35,169 crore of the corresponding period of the previous fiscal. (Mint)

Coal India, the world's largest coal miner, saw its shares jump 5.80% to 457.85 apiece in today's trade after the company posted a robust set of numbers for the December-ending quarter, beating analysts' estimates. The strong earnings were led by higher other income, lower raw material and overburden removal costs.

The company released its Q3 numbers post market hours on Monday, reporting a net profit of 9,094 crore, a robust 18% YoY growth. This was the highest PAT earned during the third quarter of any year since the company’s listing. In absolute volume, the PAT jumped by 1,375 crore compared to 7,719 crore for the October–December 2022 period.

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Its revenue from operations during Q3 FY24 went up to 36,154 crore, marking a 3% growth over the 35,169 crore of the corresponding period of the previous fiscal. The EBITDA stood at 11,373 crore, up by 9.50%, while the EBITDA margin expanded by 100 basis points YoY and 600 basis points on a QoQ basis, reaching 31% in Q3.

It posted an 11% YoY growth in its output at 199 million tonnes (MT) for Q3 FY24, compared to 180.06 MT in Q3 FY23. Coal supplies were up by 9% to 191.30 MT during the quarter as against175.8 MT of last fiscal’s third quarter. 

The FSA (Fuel Supply Agreement) realisations increased to 1,532 per tonne, marking a 3.4% year-on-year growth but a slight 0.6% decrease quarter-on-quarter. In contrast, e-auction realisations were 3,321 per tonne, down by 34% compared to the previous year but up by 17% compared to the previous quarter.

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FSA volumes expanded to 172 million tonnes in Q3, showing a 9.2% year-on-year increase and an 11.4% quarter-on-quarter increase. E-auction volumes were at 15.8 million tonnes in Q3, up by 15.6% compared to the previous year and unchanged compared to the previous quarter.

Should you buy the stock after Q3?

Following the company's impressive numbers, domestic brokerage firm Centrum Broking increased its target price to 458 apiece, valuing at 5x average FY25E/FY26E EV/EBITDA, maintaining an 'ADD' rating. 

Centrum Broking is optimistic about sustained coal demand and anticipates Coal India's ability to boost volume by 7% CAGR over FY23–26. Additionally, it expects an incremental volume of over 150 million tonnes to yield a sustainable EBITDA per tonne of 1,000.

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This high profitability is projected to generate significant cash flows post capex, with anticipated annual free cash flows (FCF) of 19,000–28,000 crore from FY24 to FY26. Consequently, the brokerage foresees a dividend per share of 30 in each of FY24 and FY25, resulting in a dividend yield of 7%.

Kotak Institutional Equities downgraded its rating on the stock from 'Reduce' to 'Sell', expressing skepticism about Coal India Limited's (CIL) ability to grow earnings from the current base. It has a target price on the stock of 335 per share.

 

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before making any investment decisions.

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Published: 13 Feb 2024, 12:44 PM IST
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