Coal India Gets A Bullish Outlook, Stock Retains Buy Rating

Coal India Ltd is primarily involved in coal mining and production. Its primary clients are in the power and steel industries, with consumers in sectors like cement and fertilizers. Classified as a ‘Maharatna’ enterprise under the Ministry of Coal, Government of India, CIL holds the distinction of being the largest coal producer globally.

Financial Performance 

On May 2, Coal India Ltd. (CIL) announced a 26% increase in consolidated net profit for the quarter that ended on March 31, 2024, totalling Rs.8,640.5 Cr. In the same period last year, the company declared a net profit of Rs.6,869.5 Cr. Even while CIL’s operating revenue decreased by about 2 % to Rs 37,410.4 Cr from Rs. 38,152.3 Cr in the same quarter last year, the company’s bottom line increased. Additionally, CIL’s consolidated revenues decreased by 1.8% to Rs.39,654.4 Cr in the January–March quarter from Rs.40,371.5 crore in the same period of the previous fiscal year. 

Moreover, EBITDA surged 17.4% to Rs 13,656.1 crore in Q4FY24, with the EBITDA margin expanding to 36.5% from 30.5% a year ago. The company, which accounts for over 80% of India’s coal output, reported a 7.8% rise in raw coal production to 241.751 million tonnes and a 7.9% increase in raw coal intake to 201.665 million tonnes during the quarter.

Impact on Share Price

CIL’s shares surged more than 4% following the announcement of a 26.2% increase in consolidated net profit. On the BSE, the stock rose by 4.15% to Rs 472.10, while on the NSE, it rallied by 3.97% to Rs 471.95. Since the beginning of the year, the stock has shown an 18% growth, outperforming the 4.7% increase seen in the benchmark Nifty 50 during the same period. 

“Buy” Rating upheld 

Despite the results, several brokerages upheld a ‘buy’ rating on the stock, emphasizing the continued importance of coal as a primary energy source, even amidst global efforts to transition to renewable energy. Nevertheless, target prices were reduced due to apprehensions regarding declining premiums.

Conclusion: In conclusion, Coal India Ltd.’s robust financial performance, marked by a significant increase in consolidated net profit and favourable market response with shares climbing over 4%, reflects the company’s strategic positioning in the coal industry. CIL’s continued growth emphasizes its significance in India’s energy landscape.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.