Stock corner: ‘Buy’ Coal India, FSA realisation drove performance in Q2FY20

Coal India (CIL) posted higher-than-consensus Q2FY20 Ebitda of Rs 36.1 bn (down 8% y-o-y). Key highlights: (i) best-ever FSA realisation owing to higher supply to non-power consumers & grade control; (ii) while e-auction volume fell 12% y-o-y, realisation slid 22% y-o-y; and (iii) receivable jumped 39% to Rs 76.4 bn compared to March 2019 level. Going ahead, we expect CIL to sustain the good performance as: (a) FSA realisation is expected to sustain at the current level owing to change in product mix; and (b) imminent pick-up in volumes. Taking cognisance of Q2FY20 performance, we raise FY20/21e EPS by 4%/3%. Maintain Buy with revised TP of Rs 235 (Rs 227 earlier). The stock is trading at 7.1x FY21e EPS.