DCF Studio

    COALINDIA.NS · NSI · Energy

    Coal India Limited

    Also onConsensus Drift

    Implied value per share

    INR 1221.52

    Market price

    INR 409.90

    Implied upside

    +198.0%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    AdjustedBeta of -0.047 is not usable in a cost of equity. Clamped to 0.30.
    AdjustedCapital expenditure runs at 10.3% of revenue against depreciation of 5.6%. A perpetuity has to be a steady state, so the terminal year uses maintenance capex at depreciation and then charges the reinvestment terminal growth requires (g/ROIC of NOPAT). The bridge is shown under Terminal Value.
    NoteRisk-free rate is an assumption: INR assumption - no free live source available for this market.

    Value Per Share

    Perpetuity growth
    INR 1221.52+198.0%
    Exit multiple
    INR 855.93+108.8%
    Market price
    INR 409.90

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (INR). Outflows negative.

    0bn303bn607bnFY27FY28FY29FY30FY31
    Nominal FCFFDiscounted to todayINR
    LineFY27FY28FY29FY30FY31CAGR
    RevenueINR 1819.0bnINR 1988.3bnINR 2173.3bnINR 2375.6bnINR 2596.7bn+9.3%
    EBITINR 477.3bnINR 521.7bnINR 570.3bnINR 623.3bnINR 681.4bn+9.3%
    NOPATINR 357.0bnINR 390.3bnINR 426.6bnINR 466.3bnINR 509.7bn+9.3%
    Add depreciation & amortisationINR 101.3bnINR 110.7bnINR 121.0bnINR 132.3bnINR 144.6bn+9.3%
    Less capital expenditureINR -188.2bnINR -205.7bnINR -224.9bnINR -245.8bnINR -268.7bn+9.3%
    Less increase in working capitalINR 154.9bnINR 169.3bnINR 185.0bnINR 202.2bnINR 221.1bn-9.3%
    Free cashflow to firmINR 425.0bnINR 464.5bnINR 507.7bnINR 555.0bnINR 606.6bn+9.3%
    Discount factor0.95780.87870.80610.73950.6784-
    Present valueINR 407.0bnINR 408.1bnINR 409.3bnINR 410.4bnINR 411.5bn+0.3%
    Present Value Of The ForecastINR 2046.3bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate6.80%INR assumption - no free live source available for this market (assumption)
    Equity risk premium8.00%Market assumption
    Beta0.300Clamped from a reported -0.047
    Cost of equity9.20%Risk-free + beta x equity risk premium
    Cost of debt7.39%Interest expense / average total debt
    Market capitalisationINR 2526.1bn94.7% of capital
    Total debtINR 140.7bn5.3% of capital, book value as a proxy
    Tax rate25.2%Effective, capped at statutory
    WACC9.01%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareINR 1221.52

    71% of EV

    Forecast FCFF, final year
    INR 606.6bn
    Capex at depreciation, working capital in reinvestment
    INR 512.0bn
    Less reinvestment at g/ROIC (8.3% of NOPAT)
    INR -42.2bn
    Capitalised
    INR 469.8bn
    ROIC (reported)
    30.3%
    Terminal value, undiscounted
    INR 7401.2bn
    Terminal value, discounted
    INR 5020.8bn
    Enterprise value
    INR 7067.1bn
    Less net debt
    INR -460.8bn
    Equity value
    INR 7527.9bn

    Exit at 4.9x EBITDA

    Value per shareINR 855.93

    57% of EV

    Terminal value, undiscounted
    INR 4080.0bn
    Terminal value, discounted
    INR 2767.8bn
    Enterprise value
    INR 4814.1bn
    Less net debt
    INR -460.8bn
    Equity value
    INR 5274.9bn

    Spread between methods: 35%.

    Sensitivity

    Value per share (INR) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    7.01%1496.101588.531701.241841.842022.25
    8.01%1285.781346.491418.041503.701608.16
    9.01%1131.251173.241221.531277.711343.92
    10.01%1012.871043.021077.071115.861160.47
    11.01%919.22941.52966.33994.141025.55

    Outlined: this model. Green text: above today's price of 409.90. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year9.3%-10.1%-19.4pp
    EBIT margin26.2%6.7%-19.5pp
    Discount rate9.0%27.4%+18.4pp
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    Yahoo Finance and RBA data. General information, not advice. Methodology.