Coal India Q4 preview: Revenue growth, PAT, wage hike impact, key factors here
Leading government-backed coal producer, Coal India is set to announce its fourth-quarter earnings for FY23 on Sunday. Overall, in the trading week that ended on May 5th, Coal India’s stock price rose by a little over 1% ahead of the earnings report. In Q4FY23, analysts have mixed opinions on Coal India’s performance. However, revenue is expected to see double-digit growth, while employee expenses are likely to take a toll on operating profit and margins due to wage hikes.
On Friday, Coal India’s stock price finished at ₹237.35 apiece broadly flat on BSE compared to the previous session. Overall, the weekly performance is a gain of 1.3% in Coal India’s stock price.
It needs to be noted that Coal India has already announced production and offtake data for the entire fiscal FY23 earlier in April month.
From April 2022 to March 2023 period, Coal India’s total production stood at 703.2 million tonne, registering a growth of 12.9% from 622.6 million tonne in FY22. Offtake soared by 5% to 694.7 million tonne in FY23 as against 661.9 million tonne in the previous fiscal.
What to expect from Coal India in Q4FY23?
In its preview note, ICICI Direct said, “For Q4FY23E, Coal India (CIL) reported coal offtake of 187 million tonne (MT), up 4% YoY. For the quarter, we expect CIL’s consolidated topline to increase 18% YoY to ₹38,635 crore. Consolidated EBITDA margin is likely to come in at 27.5% for Q4FY23E compared to 27.8% in Q4FY22 and 29.5% in Q3FY23. For Q4FY23E, we expect Coal India to clock an EBITDA/tonne of ₹568/tonne compared to ₹504/tonne in Q4FY22 and ₹590/tonne in Q2FY23. Ensuing consolidated PAT for the quarter is likely to come at ₹8,062 crore, up 20% YoY and 4% QoQ.”
Accordingly, ICICI Direct is expecting a revenue of ₹38,635 crore from Coal India in Q4FY23 up by 18% YoY and 10% QoQ. EBITDA is factored at ₹10,625 crore rising by 17% YoY and 2% QoQ. PAT is seen at ₹8,062 crore up by 20% YoY and 4% QoQ.
Meanwhile, Axis Securities in its preview note on Coal India, said, “Revenue to increase YoY/QoQ led by higher coal dispatch partially offset by lower e-auction premium. E-auction premium for Jan-Feb’23 stood at ~180%, which is lower than Q3FY23 premium of 241% over FSA. (Q4FY22 at 65%). However, the lower e-auction premium is offset by higher e-auction volumes. Cumulative Jan-Feb’23 e-auction volumes stood at 14.96MT (vs. Q3FY23 at 14.65MT) (Q4FY22 at 28MT).”
Coal India’s FY23 coal dispatch grew by 5% YoY to 694.7MT, implying Q4FY23 off-take of 187MT.
In the case of operating profit, Axis’ report said, “adjusted EBITDA excluding stripping activities to de-grew YoY/QoQ mainly due to higher wage expenses, partial offset by higher revenue. Employee expenses are expected to increase on account of provision towards the wage hike announced in Jan’23. We estimate total provision of ₹6,300 crore towards employee expenses in FY23.”
However, the brokerage’s note added, “EBITDA incl. stripping activity to decline YoY/QoQ led by higher stripping expense and employee expenses.”
Brokerage also expects the adjusted EBITDA margin to decline QoQ led by higher employees expenses.
Hereby, Axis Securities expect a 19.5% YoY and 29.7% QoQ drop in Coal India’s EBITDA to ₹7,304 crore with a margin seen at 31.5%. Similarly, PAT is expected to decline by 15.2% YoY and 26.8% QoQ to ₹5,676 crore. On the contrary, revenue is seen at ₹34,878 crore rising by 16.1% YoY and 7.6% QoQ.
During December 2023 quarter, Coal India’s net profit jumped by 70% to ₹7,755.55 crore on a consolidated basis, compared to ₹4,558.39 crore in the corresponding quarter of last year. Consolidated revenue from operations came in at ₹35,169 crore in Q3FY23, compared with ₹28,433 crore in the same period last year.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.
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