Just adjust the e-auction coal price to normal levels and see the PE and ROE. Won’t look so appealing. Current coal prices are extremely high due to Russia-Ukraine conflict
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Hi All,
I also believe that, current coal prices or the coal prices in past six months may not sustain. Coal India stock price has sharply corrected after dividend, but I believe that, it could be due to the concern about sustaining the current e-auction prices.
If any one has been analyzing Coal prices, and have some experience in relation between power demand and coal prices can throw more light, whether current ROE/ROCE looks sustainable or not. If not sustainable then upside in the stock looks limited tough lot of analysts are projecting share prices to go up in next few quarters.
I may be wrong because my knowledge in this area is limited, but holding the stock from lower levels due to good dividend yield.
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Considering that, Coal prices will soften further, but increasing power demand may keep production at higher levels, Is it possible for Coal India to sustain moderate revenue growth for 2-3 years?
I am trying to understand impact of increasing EV demand and its impact on power demand and coal prices.
Disc : Invested in Coal India from Feb 2022 onwards, for steady Dividend income.
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I too bought it because of dividend. I can’t tell about the revenue growth. But my plan is to sell if the current dividend yield goes below 4% or the PE raise above 10
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- Can anyone please comment on the price growth and dividend in Coal India?
- What’s Coal India’s take on ESG ?
ps. I’m invested in Coal India since 2018-19, with CAGR of 6.2% including dividends.
Results:
| Quarter ended | Year ended | ||||
|---|---|---|---|---|---|
| This Quarter | |||||
| Date | 31-03-2023 | 31-12-2022 | 31-03-2022 | 31-03-2023 | 31-03-2022 |
| Sales | 35,161.00 | 32,429.00 | 29,985.00 | 1,38,251.00 | 1,09,715.00 |
| EBITA | 7,642.00 | 10,593.00 | 9,335.00 | 38,000.00 | 23,616.00 |
| PAT | 5,570.00 | 7,749.00 | 6,805.00 | 28,389.00 | 17,429.00 |
| EPS | 8.98 | 12.58 | 10.89 | 45.70 | 28.17 |
Please review and recheck the numbers posted.
| % | Quarter ended | 0 | 0 | Year ended | 0 |
|---|---|---|---|---|---|
| This Quarter | |||||
| Date | 31-03-2023 | QonQ | YonY | 31-03-2023 | 31-03-2022 |
| Sales | 35,161.00 | 8% | 17% | 1,38,251.00 | 26% |
| EBITA | 7,642.00 | -28% | -18% | 38,000.00 | 61% |
| PAT | 5,570.00 | -28% | -18% | 28,389.00 | 63% |
| EPS | 8.98 | -29% | -18% | 45.70 | 62% |
| OPM | 16% | 24% | 23% | 21% | 16% |
https://www.bseindia.com/xml-data/corpfiling/AttachLive/4f992c3e-577b-4c80-aa1b-f0cb082d5ac6.pdf
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Coal India’s (CIL) board of directors has approved a price hike of 8% on highergrade
coal (G2-G10) w.e.f. 31st May’23, translating into a benefit of Rs27.03bn for
the remaining part of FY24.Management has indicated incremental revenue of
Rs27.03bn for the balance period of FY24.
This may offset the expenses of wage hikes to some extent.
Though coal prices have already moderated, the hike may help to generate marginally higher revenues in next few quarters.
Disc : Holding from low levels of Feb - June 2022 as a Dividend Stock to support dividend yield at the portfolio level.
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you still holding Coal India? I started accumulating…
Recent article about Coal India:
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Articles from this website look a lot like auto-generated.
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Yeah, they have been doing it for many years, simplywall articles are not really good for gaining a conviction.
https://www.wagonsfund.com/our-businesses
Check out Mohnish Pabrai’s Wagon fund - invested 30%+ of Net Assets into US coal mining companies. Is there a structural shift or change in the industry that I am missing?
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As per various news it seems that, Coal production is going to move up during FY24 based on demand.
There is a possibility that, based on electricity demand up trend more Coal production will happen during FY24. Also it could be aided by EV demand.
Since I have been holding Coal India mainly as a Dividend stock, I may continue to hold it for some more time.
I invested in Coal India at 165 to 180 levels, hence have started booking profits in staggered manner, as current price of 340+ looks fairly valued. I have considered P/B of 3.3 as Fair P/B for Coal India, as per my own study. 10 Year Median P/B is 3.8.
From P/B of 2.0, it has moved to 3.2 now hence looks fairly valued. Some investors may use P/E or other matrices to decide valuation of Commodity business.
Since this is Commodity business, any reduction in demand or Coal price reduction can have negative impact on PAT, but as of now, such signs are not visible.
Disclosure : This is not a Buy/Hold/Sell recommendation. These are just my observations, and being invested my views could be biased. I have not mentioned any Coal production figures as those are easily available in News and on screener.in.
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- launch of the eighth round of commercial coal mine auctions. Aims to increase coal output from underground mines to 100 million tonnes from the current 26 million tonnes per year
- The impact on the environment from underground coal mines is minimized because in open cast mines we have to remove the entire forest cover. Lot of loss of the agricultural land is also involved. But in underground coal mines, because of the technologies available now the forest cover is not required to be removed.
- Coal India Ltd expects coal from underground mines to be around 31-34 million tonnes in FY24, rising to 99-100 million tonnes in FY28.
Can this also benefit conveyer belt players ? I assume, underground coal mining will mean more usage for conveyer belts compared to open mining.
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Sets of players will benefit. Needs more research but to my mind
- higher level of mechanization- specialized earth movers, tunnel borers, conveyors, new types of explosives
- Requires Ventilation Systems- who benefits here.
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As per the news in Money control, Government is looking to double the Coal production by 2030 and beyond.
Peak electricity demand is rising at about 10% to 15% in India and that puts Coal India in good position to increase its mining capacity and also its revenues by 2030. Coal will continue to contribute about 50% in electricity generation till about 2040.
Stock price which was undervalued 2 years back below 200, seems to be fairly valued as of now but there could be further growth going forward.
Disclosure: Invested mainly for Dividend Yield.
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Coal India diversifies in to renewables- gets its first order for Solar power project.
Coal India is trying to shed it’s Grey image , reduce its carbon foot print not only by diversifying in to renewables, but also by Coal gasification with carbon capture, producing a series of chemicals and fuels of utility through Coal Gasification such as Methane , Blue hydrogen, methanol , ethanol, Ammonia, Ammonium nitrate
Discl: Invested from lower level and recently added and hence may be biased. not a buy or sell recommendation. you may please do your own assessment before buying/ selling
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