Apr'25 View on Coal India Ltd

Coal India Ltd is mainly engaged in mining and production of Coal and also operates Coal washeries. The major consumers of the company are power and steel sectors. Consumers from other sectors include cement, fertilizers, brick kilns etc. • Coal India reported a 7% yoy PAT decline at ~Rs8,500 cr, with adjusted EBITDA (excl. OBR) down 21% yoy at Rs70 bn. • Earnings weakness was due to (1) a 3.5% yoy decline in average realization at Rs1,667/ton and (2) modest volume growth of 1.5% yoy. • In our view, CIL will likely continue to be impacted by low volumes due to the lack of coal-based capacity addition in M9FY25. • We expect earnings per share (EPS) to grow by 8.3% in FY26E & 3.0% in FY27E. • Stock is currently trading at valuation of 6.4x P/E FY27E EPS. • Maintain SELL; Fair Value of Rs360 (Rs420 earlier). Q3FY25 Earnings Update: Positives: • Employee costs declined marginally ((-)3% yoy) at Rs11,221 cr in Q3FY25 due to a reduction in average manpower. Negatives: • Revenues decline 2% yoy at Rs32,395 cr, led by weak auction realizations.