@vinloop wrote:
Q4 FY 18 numbers were really good for Coal India (CIL) but just looking at the bottom line of Rs 1295cr, it could be misleading.
Q4 numbers in (cr)
(A)Sales 25168
(B)Offtake 160 MT
©realization per MT 157.3 (A/B)
(D)reported PAT 1295
(E)one-time provisions 7384
(F)other income specific to Q4 2000
(G) Adjusted PAT 6679 (D+E-F)
(H) Adjusted NPM 26.54 (G/A)I am writing this post to evaluate my own understanding of valuation and future earnings prediction. I would like the fellow members to share their views on this post.
So given the NPM at 26 for Q4. and we also have the total offtake for Q1 (153.43 MT) and with realization to be greater than 157 (e-auctions have been higher this qtr), we can arrive at sales of 24089 cr. Using the NPM of 26% we can arrive at a profit of cr 6263. against FY18 annual profit of just 9266!!
Positive Triggers:
- Govt is keen to cut down coal imports to save forex. current coal imports stand at ~150MT FY19.
- Economic growth in-turn increases Power consumption which catapults Coal production. we may reach 1billion tons of coal by 2022.
- Current logistic concerns will be eased out with Dedicated Freight corrider, Sagarmala projects and own CIL initiated rail projects.
- Govts will use coal for foreseeable future due to employment it generates in rural areas.
- AK Jha MD of CIL is a dynamic leader coming from Mahanadi Coalfields and has a credible record of making MCL a stellar subsidiary of CIL.
- ~20% of additional thermal capacity is coming up in various states of the country. No matter how much solar power is generated, the Coal mix will stay atleast for the next decade.
- Its like owning a proxy for Power companies in India which has a clear monopoly.
- Coal-bed methane could be another revenue in future.
Current Negatives
- Logistics
- Labor issues / Wage hikes (but looking at their cash flows and future needs, this could be minor)
Disclaimer: Heavily invested in CIL from Rs. 250; Views may be biased.
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