Coal India: Earnings momentum gaining pace on high realisations

Rising coal production and prices should help deliver strong profit growth though Q2 numbers missed estimates

Even as Coal India remains in the news given the government’s concerns of not achieving its targeted production and sales, as well as the company’s September quarter (Q2) performance falling a tad short of estimates, there is cheer for investors.

First, the company’s Q2 performance was strong. Firm e-auction realisations, price hikes on non-coking coal taken up earlier, the inclusion of evacuation facility charge, and better realisations on coal supplied under the fuel supply agreement (FSA; mainly to power plants) are all benefitting the company in the current fiscal year. 

Blended realisations grew 13.5 per cent year-on-year (YoY) to Rs