Other Links


Niftyviews.com is now being managed as an open source website were in anyone can post on the websiteWe advise utmost reader discretion while reading the posts. We cannot guarantee the genuineness of the content on the website.There is no original content posted on the website and all content is sourced from available third party providers

January 29, 2015

Breaking now: Amar ambani tells his clients to Buy coal india OFS

Coal India Ltd.: Riding on the reform cycle – BUY
OFS Floor Price* Rs358, Target Rs432, Upside 20.2%
*Retail to get 5% discount at cutoff Coal India has underperformed the benchmark indices over the last one year due to the overhang of Govt’s share sale, disappointment on volume growth, Govt’s directive to reduce E-auction sales and inability to pass on the increase in costs. We believe most of the negatives are already factored in the current price or have turned positive for the company. Production, which was mere 1.8% CAGR during FY10-14, increased 7.3% yoy in 9M FY15. Since coming to power, the Narendra Modi-led Government has emphasized a lot on power for all. In line with this, the power ministry has set a target of 1bn tons of coal production from Coal India by 2019 from ~500mn tons in FY15 to meet the rising demand from the domestic market.
Though we believe that it is a steep task for the company to meet its target, we expect CIL volumes to witness production CAGR of 6.5% over FY14-17E. Offtake too would be higher after decongestion of railway network. We expect blended realisations to increase 3.3% yoy in FY16 and 4.7% yoy in FY17, led by our estimate of a price hike in H1 FY16 and higher market linked prices. Margin for the company is expected to improve from FY16 due to a combination of higher volumes, increase in prices and lower diesel costs.
We estimate earnings CAGR of 13.7% over the period FY14-17 on the back of higher volumes and higher margins. At the OFS floor price of Rs358, it is available at 6.2x FY17 EV/EBIDTA, lower than its average of 7.3x. We believe Coal India would be a major beneficiary of the new Government’s focus on fuel security. In addition to the upside risks to our estimate, if government manages to achieve its goals in the near term, the company would witness a re-rating. We recommend a BUY on the stock with a price target of Rs432.
The Government of India plans to reduce its stake in Coal India from 89.65% to 79.65% via the Offer For Sale (OFS) route. The government will sell 315.8mn shares or 5% stake, through an offer for sale, with an option to sell the same number of shares as a greenshoe option. The floor price for the OFS is Rs358 and will start on Friday 30th January ‘15. Government has doubled the quota for retail investors to 20% from the 10% mandated by SEBI and would also provide a 5% discount to retail investors. We believe that the OFS is a good opportunity for retail investors to participate.
Click here for the detailed report on the same.

No comments:

Follow by Email

Sign by Dealighted - Coupons and Deals

Click here for Disclaimer