Coal India shares touched a 52-week high of Rs 164.45 in intra-day trade on Friday, rising 5% on the BSE amid optimism of future profit growth. The state-owned company’s shares reached its previous high of Rs 162.95, set on February 26, 2021.
In the last two weeks, the stock has outpaced the market, rising 13% vs a 2.2% rise in the S&P BSE Sensex. A huge rise in the stock price has helped Coal India reclaim its Rs 1 trillion market capitalization. According to BSE statistics, the stock was up 4% at Rs 163 at 09:46 a.m., with a market value of Rs 1.01 trillion.
In May 2021, Coal India reported a significant offtake in dispatches, with volumes at 55.1mt, representing a 37.6 % YoY growth. Coal offtake was up 38% year on year in the first two months of FY22, totaling 109.1 million tonnes. Offtake growth in May 2021 is driven by a 15% increase in coal-based generation, based on preliminary POSOCO data, a 7% increase in overall power demand, and inventory re-stocking at power plants.
In a stock review, analysts at Motilal Oswal Securities stated that with a rebound in demand, e-auction premiums and realisations have showed signs of improvement. This is likely to gradually seep in and improve as inventory levels at Coal’s mines decrease. Global thermal coal prices have been rising, which bodes well for e-auction realisations.
We expect strong operating leverage to emerge as offtake and realisations improve. Despite any more negative shocks, we estimate Coal India’s profitability to rebound strongly in FY22 (+29% YoY). According to the trading business, a recovery in demand and funding from the Atmanirbhar programme could help assuage concerns over strained receivables.
Meanwhile, Coal India’s board of directors is set to meet on Monday, June 14, 2021, to discuss the company’s audited financial statements for the quarter and year ended March 31, 2021, as well as the recommendation of the final dividend for 2020-21. (FY21).
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Hello, my name is Anuj Boruah. I am quite interested in writing about current events in business, finance, and the economy. I work as a newswriter at Reviewminute.
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