Coal India Q3 net profit surges 50% to Rs 4,567 cr, beats Street estimates

Led by increased prices of coal amid lower provisioning for future expenses, Coal India posted a 50 per cent increase in its net profit at Rs 4,566.74 crore for the quarter ended December 31, 2018, beating Street estimates. The company's net income grew 12.58 per cent to Rs 23,385.43 crore, despite the firm offering lower quantity at e-auctions.   

The net profit and net sales stood at Rs 3,042.91 crore and Rs 20,772.23 crore, respectively, in the third quarter (Q3) of the last financial year. Analysts were expecting the mining mammoth to post a profit of around Rs 4,060 crore.

"The profit is primarily led by higher coal prices which was effected last January and has been reflecting on the company's finances this fiscal year. Sales volume has also gone up which contributed to higher sales realisations and hence higher profit," a senior Coal India official said.

While sales volume shot up by 5.5 per cent during the first nine months of the ongoing financial year, Coal India's realisations from fuel supply agreements (FSA) — its core topline contributor — stood at Rs 1,334 per tonne. Despite lower e-auction volume, which stood at 14.65 million tonnes (mt), prices firmed up to touch Rs 2,847 a tonne — an increase of around 35 per cent on a year-on-year basis.

"Owing to higher number of FSAs, we were able to offer lower volume in the e-auctions but higher auction prices helped us maintain margins. Production also increased by 7.43 per cent to touch 412.44 mt," the company executive said.

E-auctions directly help the company post a higher profit margin as coal prices in this category of sales are at least 25 per cent higher than the notified price.

The world's largest coal miner was also able to strategically control its expenses although total expenses shot up by 5.54 per cent. Its finance costs went down by 38.07 per cent at Rs 61.96 crore while provisions stood at Rs 1.52 crore in the quarter under review as compared to the provisioning of Rs 183.70 crore in the year-ago period. 

In a regulatory filing with the BSE, Coal India said that during the Q3 period of the current financial year, the government further divested 3.19 per cent, 2.21 per cent and 0.01 per cent of total equity share capital equivalent to 335,997,714 number of equity shares by way of placement of shares in Bharat-22 ETF, CPSE ETF and OFS, respectively, and post such divestment, the centre holds 72.91 per cent of equity share capital.

After declining over the past few months, the Coal India scrip closed at Rs 222.95 a piece, up by 1.92 per cent on the BSE ahead of the results made public. The BSE Sensex, on the other hand, closed at 36,153.62 registering a 0.66 per cent decline at the end of the day's trade.