Accumulate Coal India; target of Rs 465: Prabhudas Lilladher

Moneycontrol • 2 days ago

Original source

Key Investment Pillars

  • Volume growth: Coal India reported a 12.9% YoY growth in offtake, driven by 11.9% growth in FSA volumes and a 50.6% increase in e-auction volumes, which is expected to continue driving EBITDA growth.
  • Improving realizations: FSA realization improved 3.8% YoY to INR 1,510/tonne, while e-auction realization remained broadly flat YoY at INR 2,283/tonne, with washed coal and other realization surging 94.7% YoY to INR 3,614/tonne.
  • Diversification: Coal India is advancing its diversification strategy beyond its core coal business, with progress in renewable energy and critical minerals, which is expected to contribute to long-term growth.
  • Dividend outlook: The company declared its second interim dividend of INR 10.25/share, with a total dividend payout ratio of 63% in H1FY27, and an estimated FY27 DPS of INR 30.6, implying a dividend yield of ~8%.

Thesis Validation Checklist

  • EBITDA growth: Acceleration in EBITDA growth to 17% in H2FY27, driven by strong volume growth and improving realizations.
  • Volume growth: Continued growth in offtake, driven by FSA and e-auction volumes.
  • Realization trends: Improvement in FSA and e-auction realizations, with a focus on washed coal and other categories.
  • Diversification progress: Advancements in renewable energy and critical minerals, contributing to long-term growth.
  • Dividend payout: Maintenance of a strong dividend payout ratio, with an estimated FY27 DPS of INR 30.6.