Coal India extends gains; hits 52-week high

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Shares of Coal India soared 8.87% in three trading sessions from a recent closing low of Rs 154.35 hit on Monday, 20 September 2021. In the past one year, the stock has risen 40.51% as compared with Sensex’s 57.76% rise in the same period. The scrip hit a 52-week high of Rs 170 during the intraday trade. It has risen 55.25% from its 52-week low of Rs 109.50 hit on 15 October 2020.

Last month the Chairman and Managing Director Pramod Agarwal of Coal India hinted at a price hike.

“Coming to the base price of auction, now it has been restored in most of the cases, and we are providing some premium right at the beginning, we are adding some premium at the best price only and there is no opposition from any quarter, whatever opposition is there we are tackling that,” Agarwal said.

Production almost the same as last year

He further said that CIL’s dispatches and production despite all the constraints of Covid-19 have been good. This (April-June) was a particularly difficult quarter for Coal India (CIL) because in these three months Covid-19 affected every stage of operation, he added.

“Despite that, our production was almost the same as it was last year and dispatches were substantially high compared to last year and it was even higher than 2019-2020,” he said.

CIL accounts for over 80% of the domestic coal output. The company is eyeing one billion tonnes of production by 2023-24.

On a consolidated basis, the state-run coal major’s net profit jumped 52.8% to Rs 3,174.14 crore on 37% increase in sales to Rs 23,293.65 crore in Q1 FY22 over Q1 FY21.Coal India is a coal mining company engaged in the production and sale of coal. As of 30 June 2021, the Government of India held 66.13% stake in the company.

Brokerage view

Motilal Oswal Financial Services expects Coal India’s profitability to recover in FY22E (+24% YoY). “Capex run-rate is likely to increase in the near term, but higher dispatches and some normalization in receivables should aid cash generation and maintain dividends. Demand has been improving with Coal India reporting a 33 per cent YoY increase in offtake for Q1FY22. With improving offtake and realizations, we see operating leverage coming into play in FY22,” the brokerage firm said in the result update.