Coal India sees coal offtake rise in May

Coal India Ltd (CIL) increased the production by 15.7% yoy for the month of May 2018 to 47.1mn tonnes. This brings the total production for the period of Apr18-May18 to 91.99mn tonnes which is an increase of 16.2% yoy. Offtake also rose 14% yoy for May 2018 to reach 52.86mn tonnes. Thus, offtake for Apr18-May18 stood at 103.8mn tonnes, an increase of 13.4% yoy. The management of CIL had cited that the unavailability of rakes to transport coal was a key impediment to increasing offtake. Given that offtake for May 2018 rose 3.7% mom, it indicates that the situation has alleviated slightly. The government has asked the Indian railways to prioritize shipment of coal, in order to combat the shortage. Coal India is likely to see revenue CAGR of 10.1 over FY18-20E backed by a sharp rise in coal production in FY19-20E. EBITDA margins are likely to expand by 413bps over FY18-20E due to the higher levels of production. CIL holds a dominant market share in coal mining and produces 84% of the nation’s coal output.