Motilal Oswal: Coal India Q1 Review - Negative Operating Leverage Kicks In
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Motilal Oswal Report
Coal India Ltd.’s Q1 FY21 results highlight the impact of lower volumes, e-auction realisations amid subdued thermal power demand.
Adjusted Ebitda (excluding overburden removal) was down 63% YoY. Muted power demand has impacted off-take and e-auction realisations.
However, we expect Coal India to tide over the situation given its large cash position (Net cash: approximately Rs 230 billion).
Management commentary: Receivables situation slowly improving - Coal India’s management has noted that the company’s receivables have increased to Rs 230 billion in Q1 FY21 from Rs 178 billion at end-FY20.
However, these receivables have decreased to Rs 210 billion at the end of August 2020. The Company expects the situation on receivables to improve further and normalise from October 2020.
Coal India is focusing on import substitution and targeting approximately 100 million tonne under the same.
It is planning approximately 75 million tonne of coal for the non-regulated sector and would seek to provide better quality of coal.
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