>COAL INDIA

What’s new – PMO directs MoEF to grant clearance to 12 projects 
As per a news report from Press Trust of India (PTI), post a meeting convened by the Prime Minister’s Office (PMO) with the Environment Ministry (MoEF), Coal India (CIL) and Ministry of Coal (MoC) to review the status of 12 projects of CIL, where production is proposed to be raised by 25%: 

• The PMO has directed the MoEF to grant clearances to these projects within 3-4 months; progress would be monitored on a monthly basis.
• The permission to raise production from these projects by 25% would augment output by 10mtpa.
• However, the MoEF has not relaxed the prerequisite of a public hearing (meeting of all stakeholders, including villagers of the area to be affected) prior to the grant of the environment/forest approval. 
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Implication – Signal of intent to expedite clearances is a positive


 Feedback from our interaction with policymakers and CIL over the past three months has consistently indicated a 3QFY12 timeline for MoEF awarding clearances for critical projects of CIL. In this context, PMO’s push to MoEF to expedite the ‘green nod’ for CIL’s expansion projects was imminent, in our view.


 Notwithstanding, the non-exemption from ‘public hearing’ prior to the ‘green nod’ (which arguably leaves the door open for delay in granting clearances) for the 12 projects, we view this signal of intent to expedite clearances is a positive for CIL and, in turn, the power utilities space.


Production / offtake on target; up 6.4% / 6.3% YoY in 1QFY13… In 1QFY13, CIL posted a 6.4% YoY rise in production to 102.5mt (up 6.2mt YoY) and 6.3% YoY rise in offtake to 112.9mt (up 6.7mt YoY), in line with the company’s target. We build in offtake at 460mt (vs. 433mt in FY12 and CIL’s target of 470mt for FY13) and blended realization at Rs1,463/ton (implying a 3.2% rise over the normalized FY12 blended realization of Rs1,418/ton.


…our FY13 forecasts appear fairly achievable; maintain Buy rating On our FY13F normalized earnings (which includes the incidence of the potential 26% profit share via the mining tax), the stock trades at 14.2x P/E, 7.5x EV/EBITDA.

RISH TRADER