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COAL INDIA

Price hike of 12% (incremental revenues of Rs.60-65b), Maintain Buy
We are positively surprised by the recent price hikes by Coal India. The three levels of price revisions will result in incremental revenues of Rs.60-65b pa.

The current increase (~12% effective hike) is more than the 10% hike required to offset 30% wage increase in July 2011 for the non-executive category.

Also, this price hike further reinforces the clear focus over the past 2-3 years on ‘increasing profitability per ton’.

We would review our earnings estimates and target price for possible upgrades. Maintain Buy.