Retain 'reduce' on Coal India - TP Rs.296 - Geojit BNP Paribas Financial Services Limited

- 4QFY12 PAT was in line with market estimates but EBITDA massed estimates.

- EBITDA miss was due to higher than expected rise in staff cost.

- However, the EBITDA miss has been offset by higher than expected other income and lower than expected depreciation and tax rates.

- Average sales price (ASP) increase at 14% qoq is the biggest surprise in 4QFY12 result. Staff cost increase is also higher than market expectations. Doubts persists whether any one time item is included in ASP and staff cost.

- Year to date, FY13 production GROWTH IS 5.5%-6% yoy, as against FY13 target of 7.5%. Revenue growth for FY13 is expected at 6-7% yoy. This implies ASP should be flat yoy as against qoq growth in 4QFY12.

- Despite the positive surprise of ASP in 4QFY12, the outlook on the company remains cautious due to the downside risk in FY13 volume, price hike turning difficult, possible cut in e-auction volume and adverse impact from policy changes.

Source : Equity Bulls

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