Nomura Financial Advisory & Securities has maintained 'Buy' on Coal India (CIL) with target price of Rs 417 as against the current market price of Rs 421 in its report.

Commenting on the investment rationale, the stock broker said, ''Coal India's (CIL's) production/offtake in June 2015 posted impressive y-y growth of 12% and 10.2%, respectively. Notably, while the y-y growth in coal production has been maintained at the April-May average (11.8%), y-y growth in offtake has materially accelerated vs. the April-May average (7.4%).

Relative to CIL's MoU-based targets for June, coal production/offtake was lower by 4.7%/2.9% - a production shortfall was seen in SECL/MCL/WCL, whereas an offtake shortfall was primarily seen in MCL. For 1QFY16 (April-June 2015), CIL’s coal production/offtake stood at 121.3mt/129.5mt (up 12%/8.3% y-y). Relative to its 1QFY16 MoU-based targets, while production was marginally lower, the miss in offtake was 4% (primarily attributed to MCL).

We continue to believe that CIL is a good long-term story. On our FY17F normalised earnings (adding back OBR to EPS and EBITDA + adding surface transport & loading charges to EBITDA), the stock trades at 12.7x P/E (EPS: Rs 33.5) and 8.2x EV/EBITDA (15.4x P/E and 10.7x EV/EBITDA on reported earnings). Maintain Buy.

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