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Coal India: Higher Cost Impacts Profitability. Volumes to Drive Growth Going Forward - Views on News from Equitymaster
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  • Feb 16, 2017 - Coal India: Higher Cost Impacts Profitability. Volumes to Drive Growth Going Forward

Coal India: Higher Cost Impacts Profitability. Volumes to Drive Growth Going Forward
Feb 16, 2017

Coal India has announced the third quarter results of financial year 2016-2017 (3QFY17). The topline and the bottomline declined by 7.3% YoY and 77.4% YoY respectively during the quarter.

Performance summary:
  • Income from operations increased by 4.2% YoY during 3QFY17. CIL reported sales volumes of 142.7 million tonne (MT) (up 3.5% YoY). The Fuel Supply Agreement (FSA) volume during the quarter came in at 112.9 MT (down 3% YoY). The FSA realisation was at Rs1,289/tonne (flat on YoY basis). E-auction volumes came in at 25.2 MT (up 65.8% YoY) in line with our estimate of 25.0 MT. E-auction realisation was down by 16.2% YoY to Rs 1564/tonne.
  • Operating profit declined by 21.3% YoY. Similarly, operating margins contracted by 6.2%. This is on the back of higher provision of Rs6.9 billion for wage revision of Non-executive employees (became effective from 1 July,16) and sharp increase in other operational costs.
  • Other income declined by 16%YoY. Depreciation saw a marginal decline of 3.6% YoY. Interest cost increased by 66.6% YoY during the quarter.
  • Net profit plunged by 20.3% YoY during 3QFY17 on the back fall in operating profit, increase in interest cost and decline in other income.

    Financial Snapshot
    (Rs m) 3QFY16 3QFY17 Change 9mFY16 9mFY17 Change
    Net Sales 189,715 197,045 3.9% 548,848 531,456 -3.2%
    Other operating income 6,279 7,102 13.1% 17,226 19,035 10.5%
    Total Income 195,994 204,146 4.2% 566,074 550,490 -2.8%
    Total Expenses 146,989 165,597 12.7% 434,645 461,967 6.3%
    Operating profit (EBITDA) 49,005 38,549 -21.3% 131,429 88,524 -32.6%
    Operating profit margin (%) 25.8% 19.6% 23.9% 16.7%
    Other income 13,290 11,167 -16.0% 41,698 36,598 -12.2%
    Interest 664 1,107 66.6% 2,669 2,966 11.1%
    Depreciation 7,271 7,011 -3.6% 20,159 20,603 2.2%
    Profit before tax & exceptional items 54,360 41,598 -23.5% 150,299 101,553 -32.4%
    Tax 18,188 12,754 -29.9% 51,614 36,054 -30.1%
    Net Profit 36,172 28,845 -20.3% 98,684 65,499 -33.6%
    Net profit margin (%) 19.1% 14.6% 18.0% 12.3%
    No. of shares (m) 6,207
    Basic diluted earnings per share (Rs) ^ 17.4
    P/E ratio (x) * 18.4
    * On trailing 12 month basis
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