- 11 Mar 2025
- ICICIdirect Research
AS PER MEDIA SOURCES, THE GOVERNMENT HAS PROPOSED SETTING UP A COAL TRADE EXCHANGE
COALINDIA - 391 Change: -1.50 (-0.38 %)News: As per media sources, the government has proposed setting up a Coal Trade Exchange (CTE), which will act as a competitive market for buying and selling the critical commodity with the Coal Controller Organisation (COO) acting as the regulator. Additionally, the government has proposed to amend he Mines and Minerals (Development & Regulations) Act, 1957 by inserting the definition of ‘Coal Trading Exchange’.
View: In our view, this development is unfavorable for the company, as it would lead to a significant shift from its conventional coal sales model to the coal trading exchange. Additionally, captive coal mines will also be encouraged to sell excess coal through this exchange, further altering the market dynamics. This shift is also expected to affect the company’s E-Auction sales, which contribute higher margins. Consequently, this could have a negative impact on the company's profitability in the future. However, from the long term perspective, the ambitious target of achieving 1000 MT of coal production, diversifying its product portfolio such as power, investments in new technology domains like coal gasification, inexpensive valuation, and a healthy dividend yield, support a long-term investment thesis for the stock.
Impact: Negative