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Motilal Oswal Report
Coal India Ltd.’s Q3 FY24 revenue rose 3% YoY to Rs 362 billion, and it was in line with our estimate of Rs 348 billion, led by higher volumes/fuel supply agreement realisation.
Blended average selling price was down 6% YoY to Rs 1,727/ tonne, and FSA ASP was up 3% YoY to 1,532/ tonne. While e-auction ASP declined 34% YoY to Rs 3,321/ tonne, the e-auction premium stood at 117% (higher than our estimate of 70%).
The e-auction premium, which moderated in Q2 FY24 to 83%, moved in tandem with the International coal prices. This led to an improved e-auction premium of 117%. The e-auction premium is currently above its historical average and is likely to be ~108% in FY24.
Adjusted Ebitda (net of over burden removal) increased 6% YoY to Rs 119 billion, 41% above our estimate of Rs 85 billion, owing to lower-than-expected employee and input costs, which was partially offset by the increase in contractual expenses. Excluding OBR, Ebitda rose 10% YoY to Rs 113 billion (51% above our estimate).
In line with the strong performance, improved outlook on volume, higher e-auction premiums, and lower costs, we have increased our Ebitda estimates by 15%/9%/10% for FY24/FY25/FY26.
The stock is trading at 4.7 times on FY26E enterprise value/Ebitda. We reiterate our 'Buy' rating with a revised target price of Rs 490, valuing the stock at 5.5 times FY26E EV/Ebitda.
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