Looking at VISION 2024 , The Ministry of Coal has set an ambitious target of 1.23 billion tonnes of enhancing the production of coal by FY25 to ensure the energy security of the country . Therefore , Coal India Ltd is strengthening its infrastructure of production and transportation of coal significantly and the fruits of success are for everyone to see with the coal sector witnessing an unprecedented upswing in production and dispatch levels to remarkable heights in the current FY 2024 . India’s cumulative coal production for the month of September 2023 has risen by over 15% to 67 million tonne production surpassing the figures of 58 million tonne of the corresponding month in the previous year . Sustaining its solid production pace , Coal India Ltd has produced 51.44 MT of coal during the month of September 2023 as compared to 45.67 MT in September 2022 with a growth of over 12% .
There has been a quantum jump in coal production with the cumulative coal production till September 2023 climbing to 428.25 MT in FY 2023-24 as compared to 382.16 MT during the same period of FY 2022-23 showing a growth of over 12%.
At the same time , the coal dispatch for Coal India Ltd also witnessed a significant performance reaching 55.06 MT in September 2023 as compared to 48.91MT during September 2022, representing a growth of over 12% . Meanwhile the cumulative coal dispatch up to September 2023 for the company has seen a significant increase to 462.32 MT for the current FY24 as compared to 416.64 MT during the corresponding period in FY23 witnessing a growth of 10.96 per cent. The Govt has affirmed that this exceptional growth is attributed to the unwavering dedication of the Coal PSUs which has played a pivotal role in driving this extraordinary progress.
This underscores the efficiency of the coal supply chain ensuring the seamless distribution of coal nationwide through consistent coal production and dispatch ensuring an uninterrupted supply for the energy sector . India’s power demand has remained robust during the last few months on the back of deficient monsoon leading to a rise in temperature.
Therefore, cooling and pumping demand has increased leading to high electricity demand. Analysts expect domestic coal output to remain strong during the next few months as monsoon withdraws and infrastructure spending by the government ahead of election in 2024 are expected to keep the coal manufacturing demand strong the next few years.
Analysts at large brokerage houses are predicting that Coal India should benefit from the operating leverage accruing due to higher sales volumes from both the non regulated sector and the e-auction customer fetching better realisation plus a benefit of potential hike in coal realisation.
Analysts have raised the FY2024-25 earnings estimate for Coal India by over 7% on the back of higher volume, improved volume mix and better abruption of fixed cost given the benefit of operating leverage. Any potential hike in coal price could result in an earnings surprise for Coal India Ltd.
Fund managers and brokerage houses have become very bullish on the Coal India stock currently quoting at Rs 310 on the bourses .
Even though it has risen by nearly 20% in the last few months , analysts expect it to appreciate to decent levels over the next 6 months time frame.
The potential disinvestment of its subsidiary, Bharat Coking Coal Ltd and its subsequent listing on the stock exchanges in the future could catapult the Coal India Ltd share price to new highs. Portfolio investors could accumulate the Coal India stock after proper due diligence and advice from their financial consultants.