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Informist, Wednesday, Jul 31, 2024

 

--Coal India Apr-Jun consol revenue 364.65 bln rupees vs 359.83 bln

--Coal India Apr-Jun consol net profit 109.59 bln rupees vs 105.28 bln

--Coal India Apr-Jun consol revenue 364.65 bln rupees

--Analysts saw Coal India Apr-Jun consol net profit 73.61 bln rupees

--Coal India Apr-Jun consol net profit 109.59 bln rupees

 

By Avishek Rakshit

 

KOLKATA – Increasing revenues from coking coal, volume-driven profit growth by its two subsidiaries, and growing income from associate companies backed by cost control measures led Coal India Ltd again to beat the Street's projections on its financial performance for the Apr-Jun period.

 

The Maharatna company posted a consolidated net profit of 109.6 bln rupees, up 4.1% year on year and 26.2% sequentially, thereby beating the Street’s projection of 73.6 bln rupees.

 

Its revenue from coal sales rose 0.3% year on year but fell by 3.2% sequentially at 331.7 bln rupees. However, the income from its associate and joint-venture companies rose significantly by 13.2% year on year and by 4.7% sequentially to touch 32.9 bln rupees. The total revenue of operations, thus, rose 1.3% year on year, but fell 2.5% sequentially to 364.6 bln rupees, and was above the Street's projections of 359.7 bln rupees.

 

Apart from coal mining and sales, Coal India is also engaged in fertiliser and power generation operations. The company has a 33.3% stake each in Hindustan Urvarak & Rasayan Ltd and Talcher Fertilizers Ltd; and owns a 50% stake each in Coal Lignite Urja Vikas Pvt Ltd and CIL NTPC Urja Pvt Ltd. The income from these companies that are non coal mining revenues are reported by Coal India as other operating income. Coal India made a profit of 854 mln rupees from these companies against a loss of 230.2 mln rupees.

 

Coal India's average realisation per tn of sales, however, is estimated to have fallen to 1,671 rupees from 1,697 rupees in the year-ago period on account of normalising coal prices in the e-auctions. Without divulging financial details of its financial performance in e-auctions, Coal India officials told Informist that coal is widely available in the country now and as a result, competitive intensity in the e-auctions has declined. This negatively impacted coal demand and prices in the e-auctions.

 

Its two largest subsidiaries--Mahanadi Coalfields Ltd and South Eastern Coalfields Ltd--accounted for a volume-driven topline growth which ensured the company a stability in revenue. Sales volume of Mahanadi Coalfields grew 8% at 52.7 mln tn, and that of South Eastern Coalfields rose 7% at 47.5 mln tn. However, high costs led both of these subsidiaries become a drag on Coal India profit growth. Mahanadi Coalfields posted a 2?cline in its net profit at 33.4 bln rupees, and South Eastern Coalfields registered a 6?cline in its net profit at 13.3 mln rupees. Overall, Coal India’s total sales volume rose by 6% at 198.5 mln tn.

 

However, it was Northern Coalfields Ltd--the third largest subsidiary which mines medium grade coal, that was the star of the show. It registered a 30% growth in the net profit at 27.1 bln rupees, despite a marginal 0.3% increase in coal sales at 35.1 mln tn. At the same time, Bharat Coking Coal Ltd, a relatively smaller subsidiary and focussed on mining the pricier coking coal, posted an 18% growth in net profit at 5.1 bln rupees while sales volume increased by a marginal 2% at 9.8 mln tn. 

 

Bharat Coking Coal, and Central Mine Planning and Design Institute--Coal India's mining advisory subsidiary--are expected to be listed on the bourses in the coming days.

 

 

Other key subsidiaries--Eastern Coalfields Ltd, which mines high quality coal, posted a 17?cline in its net profit at 2.5 bln rupees, and Western Coalfields Ltd, which supplies coal to the western part of the country at higher prices, registered a 30?ll in its net profit at 9.7 mln rupees.

 

Nevertheless, the net profit from its key subsidiaries was enough to register consolidated profit growth and beat the analyst's expectations by a wide margin yet again. For the past several quarters, Coal India has been surpassing the Street’s expectations.

 

Coal India does not directly mine coal but is the holding company for seven coal mining and one mining advisory companies. Its performance, thus, depends entirely on its subsidiaries.

 

Even as the world's largest coal miner focussed on increasing production, it kept costs under check. Raw material costs, which largely comprises its expenses on explosives to mine coal, fell by 11.6% at nearly 26 bln rupees, and employee benefit expenses--the largest cost component--fell by 4.8% to 114.5 bln rupees. Although other cost overheads like contractual expenses and finance costs rose, Coal India's total expenditure increased by only 0.7% at 242.9 bln rupees. The company is also benefiting from a change in accounting policy over removal of top soil to expose the coal seams which resulted in a credit balance of 659 bln rupees. The amount is being adjusted as cost reversal over many quarters.

 

Shares of Coal India today closed 0.6% higher at 522.2 rupees on the National Stock Exchange. End

 

Edited by Akul Nishant Akhoury

 

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