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News: Coal India has informed the exchanges that it will allow coal supplies exceed annual contracted quantity (ACQ) for non-regulated sector (NRS) customers in long term linkage auctions. This policy will take effect from Tranche VIII linkage auction, starting with cement and captive power plant sub-sectors. Moreover, the company has introduced the provisions for interplant coal transfer and a flexible transport mode option, allowing switch from rail to road, beginning from the eight tranches.
Views: This is a positive development given the Coal India focuses on increasing its revenue share from the high margin NRS. In FY24, coal dispatches to the NRS sector grew by 22%YoY, reaching 163 MT. We remain optimistic about Coal India, driven by its ambitious target of achieving 1000 MT of coal production by FY26, robust demand from the power sector, diversification into areas such as critical minerals and the power segment, investments in new technology like coal gasification, attractive valuation, and a strong dividend yield.
Impact: Positive