20 August 2015
Update | Sector: Utilities
Coal India
BSE Sensex
27,608
S&P CNX
8,373
CMP: INR350
TP: INR439 (+25%)
Buy
Share of higher margin volumes to rise sharply
Stock Info
Bloomberg
Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
M.Cap.(INR b)/(USD b)
AvgVal.INRm/Vol‘000
Free float (%)
Lower e-auction prices to spur import substitution
COAL IN
6,316.4
447/332
-15/-2/-9
2,211/33.7
1582/4180
20.3
Financial Snapshot (INR Billion)
Y/E Mar
2015 2016E 2017E
Sales
720.1 766.0 904.1
EBITDA
NP
EPS (INR)
EPS Gr. (%)
BV/Sh. (INR)
RoE (%)
RoCE (%)
Payout (%)
Valuations
P/E (x)
P/BV (x)
EV/EBITDA (x)
Div. Yield (%)
16.1
5.5
8.0
5.9
14.9
5.3
7.6
5.0
12.6
5.1
6.4
5.9
152.3 162.6 201.3
137.3 148.1 174.8
21.7
-14.1
63.9
34.0
54.3
23.5
7.9
66.2
35.4
56.7
27.7
18.0
69.0
40.1
63.3
90.0
112.9 90.0
Coal India (COAL) is delivering impressive double-digit production growth,
pleasantly surprising consumers.
E-auction supplies have jumped, affecting realizations in recent months. We
continue to believe that e-auction realizations would soften, and cut our
realization estimate for FY18 by INR270/ton to INR1,849/ton. This should be the
bottom-of-the-pit realization.
Growth in coal demand from power utilities is slowing. We have reworked our
demand-supply model to factor slower growth in demand from the power sector.
This results in a 103m-ton swing in volumes to the higher margin non-power
segment. The share of market-linked non-power volumes is likely to increase
from 21% in FY15 to 32% in FY20. Imports of thermal coal would remain high at
158m tons (earlier 246m tons).
We have increased cost of mining to factor higher strip ratio. Lower diesel prices
and technologically superior explosives would reduce specific costs. COAL should
benefit from operating leverage, as production accelerates.
We expect earnings growth momentum to continue, notwithstanding lower e-
auction prices, as COAL keeps its focus on production growth. We have cut our
earnings estimates marginally, and our target price from INR450 to INR439. The
stock is trading at 6.4x FY17E EV/adjusted EBITDA. Dividend yield is attractive at
5-6%. Reiterate Buy.
Double-digit production growth pleasantly surprises consumers
Shareholding pattern (%)
As on
Jun-15 Mar-15 Jun-14
Promoter
79.7
79.7
89.7
DII
8.6
8.8
2.8
FII
9.2
9.0
5.5
Others
2.6
2.5
2.0
FII Includes depository receipts
Stock Performance (1-year)
500
450
400
350
300
Coal India
Sensex - Rebased
After years of disappointments in production growth, the recent double-
digit growth in coal production has pleasantly surprised consumers. As
more volumes became available for e-auction at a time when consumers
had booked alternate supplies (imports), e-auction prices fell sharply.
We understand that e-auction prices are now 20-25% cheaper in value
terms as compared to imports. We expect e-auction prices to recover
gradually during the year.
Bottom of pit e-auction realization is INR1,849/ton
We had expected e-auction prices to soften ~14% to INR2,119/ton on
growth in domestic supply and weaker international prices. The global
demand outlook has weakened further in recent months, putting more
pressure on RB Index (NAR of 6000kcal/ton); the INR too has depreciated
against the USD. We are changing our global thermal coal price assumption
to USD55/ton (earlier USD60/ton) for FY17 and USD50/ton, thereafter. Our
e-auction realization estimates are now INR2,041/ton (earlier INR2,059) for
FY16, NR2,007/ton (earlier INR2,119) for FY17, and INR1,849/ton (earlier
INR2,119) for FY18.
Sanjay Jain
(SanjayJain@MotilalOswal.com);+9122 3982 5412/Nalin
Bhatt
(NalinBhatt@MotilalOswal.com) +9122 3982 5429
Dhruv Muchhal
(Dhruv.Muchhal@MotilalOswal.com); +9122 3027 8033
Investors are advised to refer through disclosures made at the end of the Research Report.
Motilal Oswal research is available on
www.motilaloswal.com/Institutional-Equities,
Bloomberg, Thomson Reuters, Factset and S&P Capital.

Coal India
Given COAL’s dominant market share and logistics bottlenecks in in-land
transportation, bulk consumers (steel, aluminum, etc) will prefer buying from
COAL over imports. Logistics bottlenecks and plant configuration do not
permit complete switch to imports. We believe INR1,849/ton would be the
bottom-of-the-pit e-auction realization.
Investment in wagons would give COAL better control over logistics,
eventually reducing road transport of coal and landed cost to the customer.
This should enable COAL to realize better value in e-auctions.
Share of higher margin non-power volumes to rise from 21% in FY15 to
32% in FY20
Coal allocation to non-power sector is rising on slower than expected growth
in demand from power sector and faster than expected growth in
production. Improvement in average efficiencies of power plants, reduction
in pilferage, and improvement in coal quality have reduced the specific
consumption of coal and slowed growth in demand from the power sector.
We are reducing our electricity generation growth estimates from a CAGR
(FY15-20) of 8% to 6.5% and our specific consumption estimate from
0.64kg/kwh to 0.60 kg/kwh. Consequently, our estimate of coal demand from
utilities is reduced to 690m tons (earlier 788m tons) for FY20. We believe coal
imports by utilities cannot be reduced below 60m tons, as coastal power
plants in the West and the South have significant logistics advantages in
importing. We now expect utilities’ coal demand from domestic sources to
reduce to 630m tons (earlier 728m tons) in FY17.
After adjusting for supplies from captive mines and SCCL, we believe power
sector demand from COAL would be significantly lower at 531m tons (earlier
634m tons) in FY20 – a CAGR of 6.6%. This has freed up nearly 103m tons of
supply to non-power, as our 781m-ton production estimate for FY20 remains
unchanged. Our estimate is lower than COAL’s target of 908m tons.
We believe there will be enough appetite from non-power to absorb the
additional volumes, assuming demand grows at 7% per annum. Import of
coal by non-power will remain high at 98m tons (earlier 181m tons) in FY20.
We believe that the share of non-power volumes will increase from 21% in
FY15 to 32% in FY20, as COAL and the Coal Ministry remain focused on
growing production to ~1b tons by 2020.
Strip ratio increasing; to drive up contractual expenses
COAL has recently guided gradual increase in strip ratio from 1.8x in FY15 to
2.75x along with increase in production to 908m tons. We have made
corresponding adjustment in our model to increase strip ratio to 2.45x (v/s
2x) to achieve production of 781m tons in FY20. As a result, our contractual
cost estimates increase by INR2.5b for FY17 and by INR9b for FY20.
Though the actual overburden removal would increase, there is a
deflationary trend due to correction in diesel costs. Technological upgrades
would reduce specific consumption of explosives.
20 August 2015
2

Coal India
Adjusted EBITDA estimates reduced 1-2% to factor strip ratio
The impact of reduction in e-auction prices would gradually be recovered by
rising share (from 21% in FY15 to 32% in FY20) of more remunerative non-
power volumes.
Our adjusted EBITDA estimates are reduced by INR2.1b (0.8%) to INR266b for
FY17 and by INR9.8b (2.5%) to INR386b for FY20 on factoring higher strip
ratio.
Volume growth on tack, operating leverage at play; re-iterate Buy
We continue to believe that COAL will be able to grow dispatches at a CAGR
of 10% to 781m tons by FY20. In the recent analyst meet, the management
reiterated its focus on growing production. The first phase of three critical rail
links in Odisha, Chhattisgarh and Jharkhand is on track for completion by
June 2016, September 2017 and December 2017, respectively.
Accelerating production, increasing net attrition, and increasing share of
lower cost contracted production augurs well, and will provide significant
operating leverage.
COAL is likely to deliver 12.8% CAGR in adjusted EBITDA to INR386b by FY20,
largely benefiting from operating leverage, transparent pricing for non-power
sector, and 10% volume CAGR.
We value the stock at INR439, based on DCF valuation (WACC of 12.8%),
marginally lower than our earlier estimate of INR450. The stock is trading at
an EV of 6.4x FY17E adjusted EBITDA. Re-iterate
Buy.
Exhibit 1: Metals valuation summary
Rating
Steel
Tata Steel
JSW Steel
SAIL
Non-Ferrous
Hindalco
Nalco
Vedanta
Mining
Coal India
Hindustan Zinc
NMDC
Neutral
Neutral
Sell
Buy
Buy
Neutral
Buy
Buy
Sell
Price MCAP
(INR) (USD M)
250
974
58
86
32
103
350
141
96
3,730
3,619
3,653
2,739
1,267
4,674
33,731
9,138
5,854
FY15
2.9
74.5
5.1
13.5
4.6
20.3
21.7
19.2
16.6
EPS
FY16E
8.9
-16.6
-2.6
2.1
2.8
14.2
23.5
16.1
9.6
FY17E
37.0
40.6
2.0
11.9
3.4
12.4
27.7
16.6
10.4
P/E (x)
FY16E FY17E
28.0
-58.7
-22.2
42.0
11.4
7.2
15.2
8.8
10.1
6.7
24.0
28.3
7.3
9.5
8.3
12.9
8.5
9.3
EV/EBITDA (x)
FY16E FY17E
8.5
9.9
23.2
8.7
2.4
6.4
7.8
3.8
5.1
5.8
7.3
9.7
6.8
1.3
5.7
P/B(x)
FY15 FY16E
1.4
1.1
0.5
0.8
0.6
0.6
1.4
1.1
0.6
0.8
0.6
0.8
6.6
5.6
5.4
3.0
1.4
1.2
4.9
1.2
1.1
Source: MOSL, Company
20 August 2015
3

Coal India
Exhibit 2: India thermal coal demand forecast – m tons
FY12
Coal consumption calculations for utilities
GDP growth (%)
6.7%
Power generation (b kwh)
877
YoY (%)
8.1%
elasticity with GDP
1.2
Coal based generation (b kwh)
585
YoY (%)
9.2%
kg/kwh
0.67
imports in supply
7%
Utilities - Coal consumption (mt)
394
Domestic supply
367
Imports
27
Non-utilities
197
YoY (%)
7.3
Domestic supply
153
Imports
44
Total coal consumption
591
Domestic
520
Imports
71
FY13
4.9%
912
4.0%
0.8
659
12.7%
0.66
9%
438
399
39
224
14.0
152
72
662
551
110
FY14
6.6%
967
6.0%
0.9
714
8.3%
0.60
11%
431
385
46
249
11.2
164
85
680
549
131
FY15
7.5%
1,049
8.4%
1.1
800
12.1%
0.60
14%
480
424
70
262
5.0
142
119
742
566
189
FY16E
7.5%
1,112
6.0%
0.8
857
7.1%
0.60
12%
514
454
60
280
7.0
148
132
794
602
192
FY17E
7.5%
1,178
6.0%
0.8
917
7.0%
0.60
11%
550
490
60
299
7.0
174
125
850
664
185
FY18E
FY19E
FY20E
8.0%
8.0%
8.0%
1,255
1,343
1,437
6.5%
7.0%
7.0%
0.8
0.9
0.9
986
1,065
1,150
7.5%
8.0%
7.9%
0.60
0.60
0.60
10%
9%
9%
592
639
690
532
579
630
60
60
60
320
343
367
7.0
7.0
7.0
215
248
269
105
95
98
912
982
1,057
747
827
898
165
155
158
Source: MOSL, Company
Exhibit 3: India domestic coal supply forecast
Coal India
Utilities
Non-utilities
SCCL
Captive coal mines
Steel
Utilities
Others
Less: Coking coal
Reconciliation
Total
FY12
433
312
121
52
52
8
18
26
-52
34
520
FY13
464
342
122
53
51
7
19
25
-52
35
551
FY14
471
347
124
50
53
9
4
41
-57
31
549
FY15
488
385
103
51
53
8
4
40
-57
31
566
FY16E
534
399
135
54
40
8
18
14
-57
31
602
FY17E
576
420
155
56
58
8
30
20
-57
31
664
FY18E
646
449
197
59
68
8
40
20
-57
31
747
FY19E
FY20E
717
781
488
531
229
250
62
65
73
78
8
8
45
50
20
20
-57
-57
31
31
827
898
Source: MOSL, Company
Exhibit 4: Coal India target price derivation
R&R
(mt)
21,744
42,523
64,267
NPV
INR b
1,837
407
531
2,775
EV/t
(INR/t)
84
10
NPV
INR/sh.
291
65
84
439
Source: MOSL, Company
Extractable reserves
add: value of resources
add: net cash
Equity value
20 August 2015
4

Coal India
Analyst meet takeaways
Bullish on volumes I Volume mix positive I E-auction pricing weak
The management was
confident of achieving its production guidance of 550m
tons for FY16
(our estimate: 534m tons). Advance stripping in 1QFY16 is an
evidence for the same.
Non-power FSA supplies
will increase, as coal demand from the power sector is
subdued.
E-auction prices
are lower, as participation by traders has declined.
Strip ratio
(SR) of 1.95x on 550m tons production in FY16 is higher than 1.8x in
FY15. NCL has higher SR at 3-3.5x. SECL’s strip ratio is increasing, as new mines
in Mand Raigarh Coalfield have higher SR of 3x against 1x for Korba Field.
Progress of phase-1 of 3 critical rail links:
Chhattisgarh by 2017; Odisha by
2016; Tori-Shivpur progressing but there are some delays.
Outsourcing
is currently at 55%. This will increase to ~65% on composite basis
along with growth in coal production.
Savings
seen in fuel cost. Explosives cost will decline on technological upgrades.
Manpower:
Attrition of 15,000 annually; new additions of 3k-4k; this is In-line
with expectations.
District Mineral Fund (DMF):
The management indicated that as there is
customs duty to offset domestic excise duty, a similar structure could be
implemented to offset the impact of DMF to keep domestic coal competitive.
Expect better profits in 2HFY16. Capex of INR60b and investment of INR50b-60b
likely in FY16.
E-auction prices have trended down on higher volumes
Exhibit 5: E-auction realization – Coal India v/s exchange reported
Exchange reported e-
auction realization was
down ~INR310/ton QoQ to
INR1,931/ton. The
correlation with Coal India
reported realization has
been high in the past.
E-auction real. - CIL - INR/t
3,100
2,700
2,300
1,900
E-auction real. - exchanges - INR/t
Source: MOSL, Company Data, MJunction
20 August 2015
5

Coal India
E-auction quantity offered
through MJunction
platform was at more than
15-month high in July 2015.
While this represents data
from only a single platform,
likely lower offtake by the
power sector would have
driven e-auction volumes
higher for Coal India in July
2015.
Exhibit 6: E-auction quantity offered through MJunction platform
MJunction platform
mt
5.0
4.0
3.0
2.0
1.0
0.0
4.0
2.2
1.5 1.7
2.3
0.5 0.5 0.8
Offered - mt
3.9
3.0
3.7
2.6 2.6
1.3
2.8
% of CIL total
(%)
4.2 100
80
60
40
20
Source: MOSL, Company
Exhibit 7: E-auction realization trend for Coal India’s MCL mines for the last four months
Apr-15
May-15
Jun-15
Qty. Realized Reserve
Qty. Realized Reserve
Qty. Realized
MCL mines
Allotted
Price
Price Allotted
Price
Price Allotted
Price
(kt) (INR/t) (INR/t)
(kt) (INR/t) (INR/t)
(kt) (INR/t)
Ananta
100
1,588
1,068
75
1,863
1,068
75
1,739
Balram
200
1,288
984
100
1,086
984
150
1,138
Basundhara
90
1,608
1,608
250
1,584
1,374
225
1,916
Belpahar
80
1,874
984
50
1,806
984
30
2,194
Bharatpur
40
1,616
1,068
50
1,858
1,068
60
1,663
Bhubaneswari
100
1,644
1,068
50
1,779
1,068
100
1,929
Chendipada
0
0
10
1,201
HBI
0
5
2,244
2,244
0
Hingula
208
1,134
1,134
0
99
1,284
Jagannath
80
1,749
1,608
60
1,882
1,608
52
1,608
Kaniha
100
1,069
1,068
300
1,070
1,068
200
1,079
Kulda
180
1,528
1,374
200
1,676
1,374
250
1,660
Lakhanpur
300
1,350
1,134
250
1,455
1,134
200
1,262
Lilari
50
1,290
1,284
40
1,642
1,284
40
1,891
Lingaraj
100
1,327
1,068
100
1,646
1,068
60
1,599
Nandira
15
2,980
2,980
7
2,980
2,980
3
2,980
Samleswari
150
1,408
1,134
100
1,713
1,134
120
2,022
Talcher
1
2,980
2,980
0
0
0
2,982
Total/Average/Average 1,794
1,426
1,184
1,637
1,516
1,195
1,675
1,565
Premium over reserve price
242
322
388
*July 2015 data represents only the quantity sold through the MJunction platform
Jul-15*
Reserve
Qty. Realized Reserve
Price Allotted
Price
Price
(INR/t)
(kt) (INR/t) (INR/t)
1,068
100
1,091
1,068
984
90
984
984
1,356
318
1,375
1,374
984
50
1,605
984
1,068
52
1,068
1,068
1,068
100
1,076
1,068
1,140
0
0
1,284
125
1,135
1,134
1,608
87
1,069
1,068
1,068
200
1,069
1,068
1,374
234
1,140
1,140
984
100
1,305
1,134
1,284
50
1,284
1,284
1,068
29
1,071
1,068
2,980
0
2,980
1,134
140
1,325
1,134
2,980
0
2,980
2,980
1,177
1,674
1,197
1,150
47
Source: MOSL, Company, MJunction
Coal-based power
generation growth has
slowed down over the past
few months, driving coal
demand lower.
Exhibit 8: Coal-based power generation growth – 3-month average (%)
Coal based power generation - 3m avg. (YoY %)
24.0
18.0
12.0
6.0
0.0
Source: CEA
20 August 2015
6

Coal India
Highlights from subsidiaries’ annual reports
Analyst’s diary
Share of coal dispatches to power sector increased from 76% of COAL’s total
dispatches in FY14 to 79% in FY15.
South Eastern Coalfields Limited (SECL)
Dispatches grew 1% to 123m tons; 37% of the volume was transported by road.
Profit was lower on decline in e-auction volumes, increase in contractual
expenses and rise in wage bill.
Strip ratio has jumped from 1x in FY13 to 1.25x in FY15.
Chhattisgarh railway project phase-1 progress is in line with our recent ground
level checks with railway officials.
A number of large mining projects are likely to get commissioned in FY16.
Mahanadi Coalfields Limited (MCL)
Production in FY15 grew by 10% to 121.4m tons.
Share of production by surface miner has increased significantly over the past
few years. It was 88% in FY15 as against 55% in FY11.
Strip ratio in FY15 was at ~0.8x. Overburden (OB) removal in the year was,
however, low. OB removal adjustment expense (non-cash) was up 50% to
INR21.2b due to mismatch in coal and OB production.
Departmental production was only 40% out of total material removal of 162m
tons. At MCL, coal production is outsourced, while OB removal is largely
departmental.
Environment clearances
were received for 20m tons of capacity in FY15,
thereby increasing the total approved mining capacity to 195m tons.
Mode of transport:
80% of the dispatches are through rail. Rake availability in
the year increased by 10% to 59.8 rakes/day.
Jharsuguda-Barpalli railway line:
Capex was INR3.97b. Acquisition of forest land
is pending for want of NOC under FRA 2006. One major bridge over IB River is
still under construction, while most of other bridges are already completed.
Project is expected to be completed by June 2016.
Kulda coal mine has huge stocks of nearly 5m tons.
Utilization of HEMM is poor due to lack of skilled manpower, lack of land, and
working hour restrictions during summer and monsoon.
Central Coalfields Limited (CCL)
Production in FY15 was up 10% to 55.6m tons; OB stripping was up 66% to 97m
tons.
OBR adjustment was negative INR45m.
Contracting cost increased 60% to INR11.7b largely due to jump in hiring of
equipment and higher OB removal.
EC received for 25m tons capacity during the year.
6,000 hectares of land was acquired during the year.
Tori-Shivpur rail link update:
Of the total capex of INR35b, INR2.1b has been
spent. Targeted completion of the project is by 2017. In terms of project
7
20 August 2015

Coal India
progress, INR6.1b of work has been awarded and INR3.1b is under tendering.
Bridge work is under progress.
Manpower is 45,000:
There was gross reduction of 2,900 (including 482 deaths),
while the net reduction was 1,700.
Northern Coalfields Limited (NCL)
Production in FY15 was up 5.6% to 72.5m tons. It was lower than the target due
to issues with equipment and contractors. Offtake was up 2% to 73.7m tons.
The company targets 79.5m tons of production in FY16.
Of the total coal supplied, 94% is under FSA to power plants. Of this, NTPC FSA is
~45m tons while UP RVUNL’s share is ~13.6m tons.
Capex in FY15 was INR7.15b, largely on HEMM.
Of the total composite production of 257m tons, ~135m tons (or 52%) is
outsourced. Coal production at NCL is largely departmental, while about 65% of
OB removal is outsourced.
Strip ratio would increase to 3.55x in FY16 (v/s 3x in FY15). OB removal by
contractor would increase by 50% to 205m tons.
Four mines with total capacity of 18.5m tons are likely to be completed by the
end of FY16.
Bharat Coking Coal Limited (BCCL)
Targeting production of 35m tons in FY16 (an increase of 2.9m tons YoY),
increasing to 53m tons by FY20 (of which 9m tons will be from underground
mining). It has approved EC capacity of ~80m tons.
Three coal washeries with total capacity of 11.6m tons at capex of INR7.5b
(INR1.1b spent) are expected to be completed by June 2016.
OBR adjustment (non-cash) was negative INR250m.
Western Coalfield Limited (WCL)
Acquisition and possession of 1,370 hectares (6x of average) during the year.
Offtake was up 3.6% to 41.3m tons.
Many ongoing and most future projects are not viable at current notified prices
to yield 12% IRR at 85% CU.
OBR adjustment has dropped to just INR150m.
Strip ratio is 3x.
Three projects with 6m tons capacity commissioned in FY15.
Planning to open new mines of 34m tons in FY16 and FY17.
The Central Mine Planning and Design Institute (CMPDI)
Drilling target nearly doubled to 1.5m meters for FY16.
126 projects with total capacity of 473m tons targeted in XIIth Plan.
30 project reports have been prepared with capacity of 116m tons. This takes
the total of project reports to 366m tons of annual capacity.
20 August 2015
8

Coal India
E-auction realization and volume trends – June 2015
Exhibit 9: Monthly e-auction allocated quantity
Allocated (mt)
Exhibit 10: Monthly e-auction offered quantity
Offered (mt)
Source: MJunction
Source: MJuntion
Exhibit 11: Average e-auction realization – INR/ton
Avg. realization - INR/t
Exhibit 12: Realization trend – Coal India v/s exchanges
E-auction real. - CIL - INR/t
E-auction real. - exchanges - INR/t
3,300
2,950
2,600
2,250
1,900
Source: MJunction
Source: MJuntion
Exhibit 13: Average realization (G1-G8 grade)– INR/ton
Act. Real. (G1-G8) - INR/t
at reserve price - INR/t
Exhibit 14: Average realization (G9-G17 grade)– INR/GCV
Act. Real. (G9-G17) - INR/t
at reserve price - INR/t
Source: MJunction
Source: MJuntion
20 August 2015
9

Coal India
Operational metrics
Exhibit 15: Coal India operating summary and adjusted P&L
FY13
FY14
FY15
FY16E
FY17E
FY18E
Revenue*
697,718
705,076
740,416
787,861
927,723 1,022,977
Power FSA
441,472
467,751
517,954
542,950
609,698
651,121
Non Power FSA
85,219
67,004
65,140
88,285
122,852
122,840
Eauction/MoU
171,026
170,322
157,321
156,626
195,173
249,017
Sales (mt)
464
472
489
534
576
646
Power FSA
342
354
385
404
420
449
Non Power FSA
55
42
41
55
60
65
Eauction/MoU
67
75
63
75
95
132
Revenue per ton
1,504
1,496
1,516
1,475
1,612
1,585
YoY (%)
2.1
-0.5
1.3
-2.7
9.3
-1.7
Power FSA
1,291
1,322
1,344
1,344
1,451
1,451
Non Power FSA
1,543
1,579
1,604
1,605
2,048
1,890
Eauction/MoU
2,556
2,261
2,482
2,098
2,048
1,890
Cost of Mining (ex. OB prov.)
470,174
495,603
529,580
564,908
661,373
719,300
CoP per ton
1,013
1,051
1,082
1,059
1,149
1,114
YoY (%)
1.8
3.7
3.0
-2.2
8.5
-3.0
Labor & social OH per ton
602
604
617
578
645
586
Contract per ton
125
145
174
193
215
244
Repair and Maintenance
148
170
171
172
173
168
Others
138
132
120
116
117
116
Adjusted EBIDTA**
227,544
209,473
210,836
222,953
266,349
303,677
per ton
490
444
431
418
463
470
Power FSA
278
271
262
286
302
337
Non Power FSA
530
528
522
546
898
776
Eauction
1,542
1,210
1,400
1,039
898
776
YoY (%)
2.3
-9.4
-3.0
-3.0
10.7
1.7
* Revenue includes transportation income **EBITDA is adjusted for over-burden removal non cash cost
INR million
FY19E
FY20E
1,141,677 1,242,886
708,412
770,307
132,289
141,738
300,975
330,841
717
781
488
531
70
75
159
175
1,591
1,592
0.4
0.0
1,451
1,451
1,890
1,890
1,890
1,890
782,986
857,268
1,091
1,098
-2.1
0.6
537
501
274
315
165
165
116
117
358,691
385,619
500
494
360
353
799
792
799
792
6.3
-1.2
Source : MOSL, Company
20 August 2015
10

Coal India
Story in charts
Exhibit 16: Production to grow at 10% CAGR over FY15-20
Production (m ton)
Exhibit 17: 7% CAGR in dispatches to power over FY15-20
(m tons)
Power (FSA)
Non-power
531
449 488
385 404 420
342 354
299 304 312
250
197 229
116 119 121 122 118 104 130 155
Source: MOSL, Company
Source: MOSL, Company
Exhibit 18: FSA price realization - INR/ton
FSA realization
In lieu of
wage
negotiation
1,485
1,335
Exhibit 19: Non-power price realization - INR/ton
E-auction
1,465
1,464
2,599
2,544
2,182
2,450
2,007
1,846
1,540
2,016
1,849
Linkage auction
Washed coal
1,295
1,049
985
1,235
1,327
1,314
1,466
Source: MOSL, Company
Source: MOSL, Company
Exhibit 20: Contracting share of production to increase to Exhibit 21: Contracting is ~70% cheaper than in-house
~65% by FY20
(INR/ton)
Contracting share of production (%)
58
55 57
61
64 65
Employee cost per ton of in-house prod.
Contracting per ton of contracted prod.
1,135
695 802
196
1,230
1,321 1,529
1,468
26
30
35
40
44 45 47
49 51
398 429 482
237 241 259 290 313 341 369
Source: MOSL, Company
Source: MOSL, Company
20 August 2015
11

Coal India
Story in charts
Exhibit 22: Net attrition rate (%)
Net attrition rate (%)
3.7
3.0
3.2
3.5
3.1
3.4 3.3
4.1
3.8 3.9
3.5 3.6
Exhibit 23: Cost per ton to be flattish - INR/ton
Cost per ton
1.8
Source: MOSL, Company
Source: MOSL, Company
Exhibit 24: EBITDA to almost double by FY20
Adj. EBITDA - INR b
266
304
359
386
Exhibit 25: PAT growth of ~12% over FY15-20
PAT - INR b
162 178 160
98 110
43
56
175
196
231 246
148
88
63
175
207 228 209 211 223
137 148
Source: MOSL, Company
Source: MOSL, Company
Exhibit 26: Strong FCF despite higher capex
FCF - INR b
165
103 95
125
114
67
104 95
127
72
86
166
194
Exhibit 27: Dividend yield to protect downside
8.0
Dividend yield (%)
7.5
6.4
5.7
4.8
5.7
8.0
FY14
Source: MOSL, Company
FY15
FY16E
FY17E
FY18E
FY19E
FY20E
Source: MOSL, Company
20 August 2015
12

Coal India
Financials and valuations
Income Statement
Y/E March
Net Sales
Change (%)
Operating Expenses
EBITDA
% of Net Sales
adj. EBITDA/ton
Depreciation
Interest
Other Income
Extra Ordinary
PBT
Tax
Rate (%)
Reported PAT
Change (%)
Adjusted PAT
Change (%)
Balance Sheet
Y/E March
Share Capital
Reserves
Net Worth
Minority Interest
Loans
Defferd tax Liabiity
Capital Employed
Gross Fixed Assets
Less: Depreciation
Net Fixed Assets
Capital Work in Progress
Investments
Current Assets
Inventory
Debtors
Other Current Assets
Loans and Advances
Cash
Current Liabilities
Payables
Other current liabilities
Net Curr. Assets
Application of Funds
E: MOSL Estimates
FY11
502,336
7.6
365,872
136,464
27.2
413
17,654
737
49,615
2,162
165,525
55,959
33.8
109,566
13.9
110,202
12.1
FY12
624,154
24.3
467,476
156,679
25.1
479
19,692
540
76,150
-911
213,508
64,845
30.4
148,664
35.7
162,386
47.4
FY13
683,027
9.4
502,191
180,836
26.5
490
18,130
452
88,373
-69
250,697
76,227
30.4
174,470
17.4
177,530
9.3
FY14
688,100
0.7
528,469
159,632
23.2
444
19,964
580
89,694
-14
228,795
77,679
34.0
151,116
-13.4
159,881
-9.9
FY15
720,146
4.7
567,847
152,300
21.1
431
23,198
73
86,761
-50
215,839
78,573
36.4
137,266
-9.2
137,316
-14.1
FY16E
765,988
6.4
603,435
162,553
21.2
418
24,398
69
86,311
0
224,397
76,272
34.0
148,124
7.9
148,124
7.9
(INR Million)
FY17E
904,127
18.0
702,840
201,287
22.3
463
25,598
65
85,225
0
260,849
86,054
33.0
174,795
18.0
174,795
18.0
(INR Million)
FY17E
63,164
372,659
435,823
658
4,019
-19,591
420,909
568,080
336,925
231,154
91,594
28,134
849,408
74,312
106,514
61,808
105,150
501,625
779,382
11,394
767,987
70,027
420,909
FY11
63,164
269,978
333,142
326
13,664
-11,941
335,191
376,253
238,708
137,546
11,459
10,637
668,364
55,856
34,189
0
120,254
458,064
513,959
175,737
175,549
335,193
FY12
63,164
341,366
404,530
536
13,054
-11,941
406,179
FY13
63,164
421,556
484,720
636
10,778
-22,550
473,584
FY14
63,164
360,881
424,045
636
1,715
-19,717
406,678
FY15
63,164
340,367
403,531
658
4,019
-19,591
388,617
448,080
286,929
161,150
51,594
28,134
844,940
61,838
85,219
61,808
105,150
530,925
697,201
9,208
687,994
147,739
388,617
FY16E
63,164
355,180
418,343
658
4,019
-19,591
403,430
508,080
311,327
196,752
71,594
28,134
843,124
62,958
90,240
61,808
105,150
522,968
736,175
9,654
726,521
106,949
403,430
380,964
390,107
414,795
246,561
255,449
266,951
134,403
134,658
147,844
29,034
34,960
43,158
19,814
23,950
37,749
874,731
999,590
793,955
60,713
56,178
55,681
56,630
104,802
82,410
30,347
42,489
54,375
145,013
173,760
77,594
582,028
622,360
523,895
651,801
719,573
616,028
8,290
8,372
8,051
643,511
711,201
607,978
222,930
280,017
177,927
406,181
473,584
406,678
-444,401
-568,974
-431,184
-522,181
20 August 2015
13

Coal India
Financials and valuations
Ratios
Y/E March
Basic
Adjusted EPS
Cash EPS
Book Value
DPS
Payout (incl. Div. Tax.)
Valuation (x)
P/E
Cash P/E
P/BV
EV/Adj. EBITDA
Dividend Yield (%)
EV /ton of Reserves
Profitability Ratios (%)
Debtor (Days)
Inventory (Days)
Payables (Days)
Asset turnover(x)
Profitability Ratios (%)
RoE
RoCE
Leverage Ratio
Current Ratio
Net Debt/Equity (x)
FY11
17.3
17.4
24.4
52.7
3.9
30.5
FY12
25.7
34.7
64.0
10.0
46.2
FY13
28.1
36.0
76.7
14.0
57.3
FY14
25.3
33.7
67.1
29.0
132.2
13.8
10.4
5.2
8.1
8.3
77.7
33.1
35.5
4.8
1.5
32.9
55.1
36.7
57.7
56.0
30.0
4.5
1.4
36.0
57.1
43.7
29.5
4.3
1.7
35.6
52.1
FY15
21.7
31.5
63.9
20.7
112.9
16.1
11.1
5.5
8.0
5.9
77.4
43.2
31.3
4.7
1.9
34.0
54.3
FY16E
23.5
33.4
66.2
17.6
90.0
14.9
10.5
5.3
7.6
5.0
77.8
43.0
30.0
4.6
1.9
35.4
56.7
FY17E
27.7
38.3
69.0
20.8
90.0
12.6
9.1
5.1
6.4
5.9
78.8
43.0
30.0
4.6
2.1
40.1
63.3
-1.3
-1.4
-1.3
-1.2
-1.3
-1.2
-1.1
(INR Million)
FY17E
266,349
11,947
-25,887
-86,054
166,355
-80,000
86,355
0
49,682
-30,318
0
0
-65
-157,316
-157,380
-21,343
522,968
501,625
Cash Flow Statement
Y/E March
FY12
FY13
FY14
Adj EBITDA*
207,378
227,544
209,473
Non cash exp. (income)
22,897
18,457
21,596
(Inc)/Dec in WC
35,647
-68,387
2,442
Taxes paid
-67,044
-86,520
-88,264
CF from Operations
198,879
91,094
145,247
Capex
-34,094
-24,540
-41,164
Free Cash Flow
164,784
66,554
104,083
(Pur)/Sale of Investments
-9,177
-4,136
-13,799
Interest/dividend
42,177
56,433
64,754
CF from Investments
-1,094
27,758
9,791
Equity raised/(repaid)
0
0
0
Debt raised/(repaid)
-2,474
-2,287
-12,634
Interest paid
-540
-452
-580
Dividend (incl. tax)
-74,291
-79,070
-242,430
Other financing
3,483
3,289
2,141
CF from Fin. Activity
-73,821
-78,520
-253,503
Inc/Dec of Cash
123,963
40,332
-98,465
Add: Beginning Balance
458,064
582,028
622,360
Closing Balance
582,028
622,360
523,895
E: MOSL Estimates; * Adj EBITDA is ex. OBR and including transportation/loading income
FY15
210,836
22,213
6,487
-95,721
143,815
-49,014
94,801
9,615
52,871
13,472
0
1,935
-73
-155,963
3,844
-150,257
7,030
523,895
530,925
FY16E
222,953
11,345
-5,695
-76,272
152,331
-80,000
72,331
0
53,093
-26,907
0
0
-69
-133,312
-133,381
-7,957
530,925
522,968
20 August 2015
14

Coal India
NOTES
20 August 2015
15

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In respect of any matter arising from or in connection with the research you could contact the following representatives of Motilal Oswal Capital Markets Singapore Pte Limited:
Kadambari Balachandran
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For Singapore
Motilal Oswal Securities Ltd
20 August 2015
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