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Coal India woos Street with better realisation and margin as profit jumps 3 times

Coal India woos Street with better realisation and margin as profit jumps 3 times

Coal India woos Street with better realisation and margin as profit jumps 3 times
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By CNBCTV18.com Aug 11, 2022 11:45:07 AM IST (Updated)

Coal India shares extended gains on Thursday, a day after the state-run mining company posted better than estimated financial results for the April to June 2022 quarter with its profit shooting up 2.7 times.

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Coal India shares extended gains on Thursday, a day after the state-run mining company posted better than estimated financial results for the April to June 2022 quarter, with its profit shooting up 2.7 times.
Coal India shares rose almost 3 percent in early deals and were trading 0.45 percent higher at Rs 220.85 on BSE at 9:57 am. However, the shares turned flat shortly after.
The company’s consolidated net profit shot up 178 percent on a year-on-year basis to Rs 8,834 crore for the first quarter of 2022-23 on higher sales, beating CNBC-TV18 poll projection of Rs 6,301 crore.
The firm posted a net profit of Rs 3,174 crore in the same quarter last year.
The miner’s revenue jumped almost 39 percent to Rs 35,092 compared to last fiscal year's first quarter. The analysts polled by CNBC-TV18 had estimated the figure to come in at Rs 31,515 crore.
In a regulatory filing on Wednesday, the firm said that its sales were 39 percent higher at Rs 32,498 crore during the quarter under review, as against Rs 23,293 crore registered in the corresponding period of FY22.
Coal India’s total expenses during the quarter stood at Rs 23,985 crore amid higher production and despatches during the quarter versus Rs 21,626 crore in June ended quarter last year. The cost of materials consumed rose to Rs 3,057 crore in the quarter under review from Rs 1,843 crore in the year-ago period.
The company's earnings before interest, taxes, depreciation and amortisation (EBITDA) also increased significantly by 152 percent to Rs 12,250.7 crore. Margin at 34.9 percent beat Street expectations following blended realisations that went up 26 percent YoY.
Following a stellar quarterly performance, global brokerage CLSA sees more upside in Coal India’s stock as it has raised its target price to Rs 250 from Rs 205 per share earlier and maintained a buy rating. This means the brokerage sees more than 13 percent upside in the stock from Wednesday’s closing price.
According to CLSA, the miner’s above estimates come on the back of better realisations. Also, the outcome of wage negotiations and fuel supply agreements (FSA) price increases were key for outperformance, it said, adding that the firm commanded a highest-ever premium of 200 percent to FSA.
The brokerage expects e-auction realisations to soften in the second half of the current fiscal year and it will also keenly watch returns from diversification in new businesses.
On the other hand, Jefferies has given Coal India shares a hold rating with a target price of Rs 175 per share. It noted that cash EBITDA was up 2 percent sequentially and 45 pecent above its estimate. Q1 dispatch volumes fell a slight 1 percent on a quarter-on-quarter basis, but blended average selling price (ASP) rose 10 percent during the period.
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