Buy Coal India: target of Rs 258: ICICI Securities

ICICI Securities research report on Coal India

Coal India (CIL) posted higher than expected production/offtake in Sep’20 and consequently Q2FY21. For Sep’20, production/offtake was 40.5mnte Rs 46.5mnte, up 31.6% Rs 31.7% YoY, while the figures for Q2FY21 were 115.1mnte Rs 134.2mnte, up 10.6% Rs 9.6% YoY. Thus, production/offtake recovered substantially from -9.7% Rs -18% YoY in 4MFY21 to reach 236mnte Rs 255mnte, down only 2% Rs 7.6% YoY, with MCL and NCL outperforming among the subsidiaries.

Outlook

CIL’s efforts in terms of OBR, higher eauction volumes and import substitution makes us believe that if the positive trend continues until Nov’20, the company may exceed our volume estimate of 580mnte for FY21E (it is confident of achieving 660mnte). Maintain BUY with the target price unchanged at Rs258.

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