Coal India Limited (CIL), the world’s largest coal producer, has been experiencing a decline in its stock value, raising concerns among investors and market analysts. Several factors, including fluctuating coal demand, regulatory challenges, and market dynamics, contribute to this downward trend.
Price Action
With a market capitalization of Rs.2.4 lakh crore, Coal India Ltd’s share price reached an intra-day high of Rs.395.80 per share on Friday, rising 0.7 percent from its previous close of Rs.392.95 per share. The shares have retreated since then and are trading at Rs.389.60 per share. Coal India is a high dividend-paying stock with a dividend yield of 6.82.
The shares have dropped by 8.6 percent from Rs.417.15 in the past month and are down 19 percent from Rs.467.05. However, they have risen by 4.27 percent from Rs.365.6.
What happened
Coal India’s stock has recently declined due to weak financial performance and external challenges, including reduced power demand that has significantly affected coal sales.
A key issue is the Jharkhand government’s claim of Rs.1.36 lakh crore in outstanding dues from the central government, comprising Rs.1.01 lakh crore for land acquisition, Rs.32,000 crore for common cause judgments, and Rs.2,900 crore in royalties on washed coal.
The Jharkhand government has taken legal action to recover dues, stating that delayed payments are hindering the state’s development. Chief Minister Hemant Soren has urged the central government to resolve the issue, calling the funds the state’s rightful share.
Future Outlook
Coal India Limited (CIL) has set a target to increase coal production to 1 billion tonnes by FY 2026-27, up from 773.647 million tonnes in FY 2023-24, reflecting a 10 percent year-on-year growth. The company plans to allocate Rs.15,500 crores in capital expenditure for FY 2024-25, with a focus on expanding into solar power and coal gasification.
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Financial Performance
As per its latest financial results, the company recorded consolidated revenue of Rs.30,673 crore, reflecting a 6 percent decrease YoY. Net profits also saw a 22 percent decline, totaling Rs.6,275 crore during the same period.
The company has shown remarkable growth in liquidity and earnings ratios. Its price-to-earnings ratio stands at 7.02, significantly lower than the industry average of 19.0. The company showcases a strong current ratio of 1.81 and a debt-to-equity ratio of 0.08.
In terms of return ratios, the Return on Capital Employed (ROCE) and Return on Equity (ROE) stand at 63.6 percent and 52.0 percent, respectively.
Company Overview
Coal India Limited (CIL) is a state-owned coal mining corporation established in 1975, and headquartered in Kolkata, India. It is recognized as the largest coal producer globally, operating across eight Indian states with a total of 322 mines, including 138 underground and 171 opencast mines
Written by – Siddesh S Raskar
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