Coalindia vs Grasim Q3 FY24

Coal India reported a strong Q3 FY24 with highest-ever nine-month revenue of INR 104,914 crore (+5% YoY) and PAT of INR 23,849 crore. Production grew 11% YoY to 531.9 MT, driven by robust demand from power plants and improved logistics. Management maintained FY24 production guidance of 780 MT (likely ~770 MT due to SCCL lag) and set FY25 target at 838 MT. E-auction premiums moderated to 36-48% in Jan-Feb from Q3's 116% due to higher domestic availability. CAPEX guidance for FY25 is INR 17,500 crore, funded largely through internal accruals. Key risks include potential further decline in e-auction premiums and execution challenges in SCCL's ramp-up.

Guidance read

FY24 production target of ~780 MT: Management expects to achieve ~770 MT production for FY24, slightly below the original 780 MT target due to SCCL lag, but with efforts to minimize the gap. FY25 production target of 838 MT: Ministry has set a production target of 838 MT for FY25, down from initial 850 MT due to high coal stocks, with a review in April. CAPEX of INR 17,500 crore for FY25: CAPEX target for FY25 is INR 17,500 crore, including coal mining expansion, solar projects, and diversification initiatives. E-auction volume to be at least 15% of production: Management aims to maintain e-auction volumes at 15% or more of production, with potential to increase up to 20% if demand permits.

Risk read

Key risks include Declining e-auction premiums — E-auction premiums have fallen sharply from 116% in Q3 to 36-48% in Jan-Feb, which could pressure realizations if the trend continues.; SCCL production shortfall — SCCL is lagging its target by 8-9 MT due to land issues and EC clearances, posing a risk to overall production targets.; Accounting policy change impact on tax — Change in shipping activity adjustment accounting may lead to tax implications, though management expects limited net impact.; Receivables buildup — Trade receivables increased from INR 13,000 crore to INR 17,000 crore, driven by delayed payments from power utilities, which could strain cash flows..

Promise ledger

Of 2 tracked promises, management 0 met, 0 close, 2 missed.

Grasim's Q3 FY24 consolidated revenue grew 12% YoY to INR 31,965 crore, with EBITDA up 34% to INR 5,150 crore, driven by volume growth in VSF (34%) and caustic soda (5%), though realizations remained weak due to global oversupply. Standalone revenue was INR 6,400 crore (+3% YoY). The paints business (Birla Opus) is on track for launch in Q4 FY24 with trial production at three plants, targeting pan-India distribution by FY25 end. B2B e-commerce Birla Pivot achieved INR 120 crore monthly revenue run-rate. VSF margins are expected to bottom out, while chemicals remain stable to gently improving. Risks include continued pressure from cheap Chinese imports and Red Sea disruptions impacting export trade.

Guidance read

Paints launch in Q4 FY24 with pan-India distribution by FY25 end: Birla Opus will launch in Q4 FY24 starting with North and South India, targeting national distribution by end of FY25. Net debt-to-EBITDA to reach 3-3.5x post paints capex: Management guided net debt-to-EBITDA of 3-3.5x after completing paints capex and rights issue proceeds. Capex guidance of INR 5,900 crore for FY24: Management reiterated plant capex guidance of about INR 5,900 crore for FY24, with 76% allocated to paints.

Risk read

Key risks include Cheap Chinese imports impacting VSF realizations — VSF realizations declined 2% QoQ due to cheaper imports from China, pressuring margins.; Red Sea disruptions affecting global trade — Red Sea disruptions are impacting 12-15% of world trade, including 30% of container traffic, creating uncertainty for export markets.; Chlorine pricing remains negative due to agrochem slowdown — Chlorine realizations worsened by INR 2,000 sequentially to negative INR 4,000, driven by slow agrochem demand.; Paints business losses increasing ahead of launch — Paints EBITDA losses increased QoQ as uncapitalized expenses rise; profitability timeline remains uncertain..

Promise ledger

Of 2 tracked promises, management 0 met, 0 close, 2 missed.