Coal India Under-Performs In Q3FY14

The company’s consolidated bottom line witnessed a fall of 11.40% on a YoY basis to stands at Rs 3894.09 crore in the third quarter of the current fiscal as against Rs 4395.11 crore for corresponding period last year. Its realisations have declined by 0.7% as compared to the December 2013 quarter mainly due to lower price under auction route.

 The total income declined by 2.92% to Rs 19110.74 crore against Rs 19685.53 crore on a year-on-year basis. However on standalone basis total income increased by 361.98% to stand at Rs 9969.86 crore against Rs 2158.04 crore in the same period last year.

During the quarter, the company reported a 1.14% rise in its total coal production to 118.71 million tonnes. The coal off take however, was lower by 2.73% to 117.16 MT.

On the margins front, CIL has reported a decline in its EBITDA margins. During the quarter, its margins stood at 24.24% against 24.75% reported a year earlier. The decline in margins was due to the rise in the employees benefit expenses, which rose by 10.70% in the quarter on a YoY basis. The consumption of raw material expenses, which form 10.39% of the sales, has risen by 13.66%. It’s contractual and repairs expenses have also gone up by 21% and 34% respectively, which has bought its margins down. However, the good part of the result is that the company has posted a margin expansion on a sequential basis.

Company’s PAT margin stood at 23% in the current quarter against 25.36% in Q3FY13. We believe that with the net profit going down than expected and the decrease in coal off take, one may expect a negative sentiment on the stock. We, however, remain neutral on the counter and one can trade cautiously.