Coal India up on strong volumes after company raises non-coking coal prices

Last Updated: Tue, Jan 09, 2018 13:49 hrs
Coal India

Coal India shares are hogging the limelight on the Indian bourses on Tuesday, following the company hiking prices of Non-Coking coal.

The stock rallied to a high of Rs 311 on the National Stock Exchange and despite paring some gains subsequently, is still well entrenched in positive territory at Rs 305, up more than 6% from its previous closing price.

On the National Stock Exchange, the Coal India counter has clocked a volume of nearly 23.5 million shares so far in the session. On BSE, the counter has recorded a volume of 1.27 million shares so far in today's session, nearly 3.4 times the average daily volume of 3.83 lakh shares.

The Coal India counter is attracting investors today after the the company announced a revision in Non-Coking coal prices with effect from 9 January 2018. The company said that the revision will be applicable to all subsidiaries of Coal India including NEC for regulated and non-regulated sectors.

Coal India has raised prices of thermal coal by an average 9%. This revision will result in Coal India earning an incremental revenue of Rs 1956 crore for the balance period of the current financial year ending March 2018. The projected annual incremental revenue would be Rs 6421 crore.

The company resorted to this price hike as rising costs hurt its profitability in recent years. The previous revision (a 6.3% hike) in prices of fuel was made in May 2016. That resulted in the company posting an additional revenue of Rs 3234 crore in financial year 2016-17.

Recently, Coal India levied evacuation charges of Rs 50 per tonne which is expected to earn the company Rs 2500 crore annually and Rs 800 crore this year.

Coal India, which is the largest coal producer in the world, accounts for almost 85% of total coal production in India. In the last three years, the company's revenue grew at 3% CAGR.

The company is looking to grow volumes by 9% this year to cater to domestic as well as export demand. It is also planning to set up 15 more washeries with an aggregate supply of 112.6MT to cater to demand uptick. Revenue is expected to grow by 7% CAGR over the next two years. The company expects that increased realizations from e-auctions and government's efforts to increase dependency on domestic coal will help maintain the growth momentum.

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