Earnings Outlook
Coal India's PAT seen declining 8% on year in Jan-Mar
This story was originally published at 12:20 IST on 23 April 2025
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By Avishek Rakshit
KOLKATA – State-owned Coal India is likely to continue with a muted financial performance for Jan-Mar as well, according to brokerages tracking the company. The primary reason affecting the top line is flat sales volume and a decline in its average price realisation per tonne of coal sold amid tepid demand. Muted sales at e-auctions, on the other hand, are likely to keep the bottom line stressed.
The world's largest coal producer is likely to report a 7.6% on-year decline in its consolidated net profit for the March quarter at INR 80.2 billion, and the company's revenue is likely to fall 2.3% to INR 365.5 billion, according to the average of the estimates of 12 brokerages. Sequentially, however, the revenue is likely to rise 2.2%, but the profit is likely to decline 5.7%, according to the estimates. Coal India will announce its earnings for the quarter and year ended March on May 7.
For Oct-Dec, Coal India reported a sharp 17% on-year decline in its net profit at INR 85.1 billion, against the Street's estimate of 85.2 billion, and the revenue fell 1% on year to INR 357.8 billion.
For the March quarter, Sharekhan Ltd. has the highest profit estimate for Coal India at INR 88.7 billion, and JM Financial Institutional Securities Pvt. Ltd. has the lowest at INR 64.6 billion. Motilal Oswal Financial Services Ltd. estimated Coal India's revenue the highest at INR 382.9 billion and Emkay Global Financial Services Ltd. estimated it lowest at INR 337.3 billion.
The Maharatna company reported flat sales volumes on year – between 200 million tonnes and 203 million tonnes – according to brokerages tracking the company. However, sequentially, the offtake increased 4%, Axis Securities Ltd. said in a report. This explains why brokerages anticipate sequential revenue growth for Coal India.
Long-term coal supply contracts, which are often referred to as fuel supply agreements by Coal India, comprise the bulk of sales and make up for most of the revenue, but electronic auctions directly boost the company's profit. This is because the cost of mining coal is the same for the fuel sold under supply agreements, where prices are notified and pre-set, but at e-auctions, prices are entirely driven by demand and are set 20% higher by Coal India compared to notified prices.
Nuvama Wealth Management Ltd. said that although sales volume at e-auctions increased 22% on year to 21.5 million tonnes, prices increased only 2% on year to INR 2,545 per tonne. Kotak Institutional Equities, however, projected prices at e-auctions higher by 7% on year at INR 2,718 per tonne. Axis Securities, which projected a 10% on-year increase in the company's e-auction volume, predicted the e-auction premium at 63%, lower by 3% on year and 13% on quarter. As such, brokerages vary widely in estimating the net profit for Coal India.
E-auction premium refers to the net selling price of coal at the auctions over the notified prices, which directly adds to Coal India's profit.
With brokerages having different estimates of Coal India's performance at e-auctions and in long-term sales contracts, their estimates for the company's blended realisation vary as well. Kotak Institutional Equities estimated the blended realisation from coal sales at INR 1,707 per tonne, flat on year, but Nuvama Wealth Management estimated it to decline 1.5% on year.
In a report, ICICI Securities Ltd. said lower volume growth and lower e-auction prices would negatively affect Coal India's Jan-Mar financial performance. While the company has taken isolated price hikes in different subsidiaries, profitability is likely to be impacted by higher manpower costs and adverse operating leverage, ICICI Securities said. Nuvama Wealth Management, on the other hand, estimated a 5?cline in employee costs.
Coal India is expected to report earnings before interest, tax, depreciation, and amortisation of INR 100.2 billion, according to the average of the estimates of 10 brokerage firms. The highest EBITDA estimate of INR 129.7 billion was by Emkay Global Financial Services Ltd., and the lowest by Nuvama Wealth Management at INR 10.9 billion.
JM Financial Institutional Securities said the company's adjusted net profit is expected to decline due to an expected increase in depreciation by 28% on year on account of over-burden adjustment. Over burden adjustment refers to adjustments in the company's accounts pertaining to top soil removal to expose coal seams for extraction.
At 1158 IST, shares of Coal India were up 0.2% at INR 399.5 on the National Stock Exchange.
Following are the Jan-Mar earnings estimates for Coal India based on reports from 12 brokerages in descending order of the estimate of net profit
| Brokerage firm | Net sales (in million rupees) | Net profit (in million rupees) | EBITDA (in million rupees) |
| Sharekhan Ltd | 3,71,210.00 | 88,700.00 | |
| Elara Securities (India) Pvt Ltd | 3,65,980.00 | 88,282.00 | 1,25,790.00 |
| Kotak Institutional Equities | 3,42,133.00 | 87,962.00 | 89,389.00 |
| Equirus Securities Pvt Ltd | 3,58,094.00 | 87,070.00 | 1,22,157.00 |
| Motilal Oswal Financial Services Ltd | 3,82,900.00 | 86,900.00 | 1,11,100.00 |
| Systematix Shares and Stocks (India) Ltd | 3,71,600.00 | 82,200.00 | 99,900.00 |
| Emkay Global Financial Services Ltd | 3,37,338.60 | 80,864.80 | 1,29,689.40 |
| Anand Rathi Share and Stock Brokers Ltd | 3,74,980.00 | 76,802.00 | |
| Nuvama Wealth Management Ltd | 3,67,200.00 | 75,500.00 | 10,900.00 |
| ICICI Securities Ltd | 3,68,446.00 | 74,052.00 | 1,01,936.00 |
| Axis Securities Ltd | 3,74,980.00 | 69,480.00 | 90,940.00 |
| JM Financial Institutional Securities Pvt Ltd | 3,71,300.00 | 64,594.00 | 1,20,164.00 |
| Average | 3,65,513.47 | 80,200.57 | 1,00,196.54 |
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Avishek Dutta
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