Coal India Limited (CIL) is an Indian state-owned coal mining and refinery company headquartered in Kolkata, West Bengal, India and the largest coal-producing company in the world.

Despatch growth turns positive in Dec — CIL’s despatches grew ~2% yoy in Dec19 vs ~7% yoy decline through Apr-Aug19. Absolute volumes (adjusted for number of days) were higher in Dec vs Nov. Improvement was likely driven by continued restocking by power plants and relatively better power generation. Coal stocks at power plants improved to ~18 days at the end of Dec vs ~15 days at the end of Nov. Coal based power generation was down ~4% in Dec vs ~15% decline in Oct+Nov. YTD despatches are down 6% yoy; 3Q down ~8%.

CIL is down ~17% in 6 months, likely discounting the weakness in demand. While volume weakness could persist for some time (albeit the worst maybe behind, at 7x 1Y forward PE on consensus (2SD below mean of 12x), risk-reward is favorable, together with an attractive dividend yield (~9%); lower tax rate should help.

Disclaimer: The above report is compiled from information available on public platforms. inChat team advises users to check with certified experts before taking any investment decisions.

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