Coal India share price gains 1.26% on strong production and sales volume numbers for November

Coal India’s production during first eight months of FY24 at 460.0 mt is up 11.2 % while Coal India’s dispatches at 485.4 have risen 9.1%

The production and offtakes for Coal India in November also grew well. Coal India’s offtakes at 63.1 million tonne (mt) during November were up 6.2% year on year while Coal production during the month at 66.0 mt was up 8.8% year-on-year.

All the eight subsidiaries of Coal India contributed to November production growth for Coal India.

It is the strong rise in Coal India production that is improving the company’s earnings prospects. The strong power demand has meant that the Coal India supplies remain strong to the power sector. Though supplies to the power sector are under Fuel supply agreements and hence realisations only see limited rise, however higher production means more supplies’ are still available for meeting strong demand in the open market through e-auctions. The good domestic demand and rise in international coal prices means that Coal india’s e-auction realisations are improving its earnings prospects.

Also Read- Hero Moto, BPCL, Coal India among top 5 gainers that helped Nifty scale new high

The Coking coal (FOB Australia) prices increased 2% week-on-week to $ 322 a tonne as per Prabhudas Lilladhers weekly report dated 29Th November. The coking coal prices have moved up sharply 21% sequentially and are positive for Coal India’s realizations and demand.

E-auction premiums which had cooled off in July23 witnessed an improvement in August-October’23. E-auction premium in 2QFY24 stood at 83%, above its historical average and is expected to be around 85-90% for FY24, said analysts at Motilal Oswal financial Services ltd.

In a recent investor call Coal India management told analysts that it is expected to dispatch 15% of the total volumes as e-auction in 2HFY24. The higher e-auction prices and higher volumes are positive for Coal India’s earnings outlook.

The analysts at Elara Securities (India) Pvt Ltd who have introduced FY26 earnings estimates had raise their target price for the stock too. They said that “We remain positive on Coal India given solid volume delivery in the past few quarters and expected annual dividend pay-out of ₹20-23 a share, implying a 7% yield.

Also Read-GAIL share price rises 3% to scale 52 week high on improved earnings prospects

Even analysts at MOFSL believe that Coal India is well placed to capitalize on the growth opportunity ahead. Any hike in FSA prices post-election will further add to the financial performance of the company, they said.

Milestone Alert!Livemint tops charts as the fastest growing news website in the world 🌏 Click here to know more.

Updated: 01 Dec 2023, 04:19 PM IST