Coal India’s (CIL’s) December 2020 operating performance was subdued with offtake down 2% year on year (YoY) to 52.6mt, while production volume was slightly up at 58.3mt. Key points, offtake growth slowed at all subsidiaries, though MCL and NCL continue to stand out. Production uptick sustains at CCL and NCL. Inventory is up at 57.7mt.
Taking cognisance of December performance, we believe it will be challenging for CIL to exceed FY20 volume of 582mt. Further, cash accretion challenges mount as receivables from power sector are up at Rs233 billion (November-end). That said, we find dividend yield and valuation attractive. Maintain ‘buy’ with target price of Rs158.
