Coal India Q4FY21 result analysis: Expert highlights TRADING STRATEGY, Know target price here

Coal India share price: The state-owned coal mining company Coal India’s consolidated net profit stood at Rs 4,589 crore in Q4 FY21 vs Rs 4,626 crore YoY. Consolidated revenue from operations declined 3% to Rs 26,700 crore in the reported quarter compared to Rs 27,568 crore posted last year. EBITDA stood at Rs 6,382 crore in the period under consideration compared to R 6,389 crore posted last year. The margin remained almost flat at 23.9% in Q4FY21 compared to 23.17% posted in Q4FY20. In addition, the FSA (Fuel Supply Agreement ) realizations grew 3% QoQ to Rs 1,392 crore compared to Rs 1,354 crore. E-auction realizations grew 20% QoQ to Rs 1,752 crore compared to Rs 1,466 crore. Trade receivables grew 36% YoY to Rs 19,623 compared to Rs 14,408 crore. Besides, the board has recommended a final dividend of Rs 3.50 crore for FY21. JPMorgan maintains an overweight call on Coal India, price target raised to Rs 200. Citi maintains BUY call on Coal India with price target of Rs 160.

Technical Analyst Nilesh Jain, who is Assistant Vice President (AVP), Equity Research Technical and Derivatives at Centrum Broking says that Coal India provided breakout from a cup and handle pattern on the daily time frame. Now, it has to hold above breakout level of Rs 157 for the upside move to continue towards Rs 170 and above that Rs 182. The major support is placed at Rs 149.

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Edelweiss sees working capital unlocking as a significant value driver for Coal India. In Edelweiss' view, international coal prices might firm up owing to higher Chinese imports. This would enable Coal India to increase its e-auction volume from the import substitution category as well as sustain the e-auction premium at 20-25% over FSA.

Edelweiss says Coal India’s receivables have declined 17% (from the Feb 2021 peak) to Rs 208 bn in April 2021. Given the traction in power sector volume, up 34.2% YoY in Apr 2021, Edelweiss expects receivables to reduce further. Besides, Edelweiss expects working capital unlocking from dip in inventory as well. Furthermore, the focus on e-auction volume, though at a lower premium of 18-20%, is likely to improve cash accretion. Hence, Edelweiss expects cash accretion in Coal India in Q1FY22 for the first time after Q2FY19. In Edelweiss view, this increases the prospects of high dividend besides meeting the capex commitment.