Coal India: Weak Q3, but downside limited

Profitability misses expectations, but e-auction rates, volumes, demand give comfort

With Coal India posting lower-than-expected profitability for December quarter (Q3), its share price fell 1.23 per cent on Monday. However, there is an improvement in key parameters on a sequential basis, which suggests numbers should get better unless the final wage hike is higher than seen.

For Q3, wage costs and provisioning for wage hikes led to decline in profitability. Employee-benefits expenses increased 10.4 per cent year over year (or Rs 772 crore), provisions more than doubled (up Rs 208 crore) and over-burden removal adjustments (related to mining operations) rose 9.5 per cent year over year (up Rs 705 crore),