Religare Capital has maintained 'Hold' on Coal India (CIL) after the company declared its second quarter results. The stock broker fixed price target at Rs 380.
Commenting on the results, Religare said, ''CIL reported in-line net sales of Rs 169 billion (+8% YoY) and PAT of Rs 25 billion (+16%), while beating our EBITDA estimate by 9% (Rs 30 billion, +18% YoY) due to lower overburden charges. Employee cost benefits aided profitability, while contractual expenses increased by 26% YoY. E-auction premiums stood at just 36%, implying weak user industry demand from the non-power sector.''
Commenting on the investment rationale, the stock broker said, ''High-margin e-auction volumes constituted 12.2% of H1 volumes at a price premium of 53% vs. 82% YoY. In our view, the scope for further deterioration in this segment is low. With 7m dispatches at 296mt, 530mt for FY16 (including 11.2% or 60mt of e-auction volumes) looks achievable, rising further to 560mt for FY17. We believe further downsides to the business are limited given CIL's already low prices and potential dividend yield of 5% is attractive. Maintain Hold with a Sep'16 TP of Rs 380.''
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