Coal India’s shipments rose 3% year-on-year to 51.5 MT in February 2019. Key highlights: 1) shipments of large subsidiaries — MCL and SECL — rose 2% and 4%, respectively; 2) production grew 6.5% y-o-y to 58.1 MT led by MCL and SECL; and 3) pit-head inventory estimated at 35 MT as at February end, leading to improved coal availability. Going ahead, we expect: a) Coal India (CIL) to report 4.5% y-o-y growth in shipments in FY19; and 2) e-auction premium could dip, given the inventory build-up. Maintain ‘hold’ with `243 target price. The stock is currently trading at 9.5x FY21E EPS.
CIL’s February 2019 shipments rose 3% y-o-y to 51.5 MT, with production rising 6.5% y-o-y to 58.1 MT. For us, the greatest succour is 4%/17% uptick in MCL’s (major subsidiary) shipments/production volume in February. Local issues at SECL also seem to have eased as its shipments/production rose 2%/6%. On production outpacing shipments for the fourth straight month, we estimate inventory at 35 MT as at February end. We envisage non-regulated end users to benefit from the improved coal availability.
