- 26 Dec 2024
- ICICI Securities
COAL INDIA AND BPCL LIKELY TO INVEST RS 12,000 CRORES INTO COAL GASIFICATION JV
News: As per media sources, BPCL and Coal India plans to jointly invest in a Rs 12,000 crores coal gasification project in Chandrapur district of eastern Maharashtra. Coal India and BPCL will hold 51% and 49% in the JV, respectively. The project will have debt to equity ratio of 70:30 or 65:35, with both the partners contributing equity commensurate with their shareholding.
Views: Coal Gasification is one of the key diversification initiatives by the company to boost the revenue streams beyond traditional coal mining. This above project aims for a production capacity of 1.83 MMSCMD of synthetic natural gas. Additionally, this project will be eligible for a Viability Gap Funding of Rs 1,350 crores. From a long-term perspective, we have a positive stance on the company, driven by its ambitious target of achieving 1000 MT of coal production by FY27, diversification into areas such as critical minerals and power segment, attractive valuation, and a strong dividend yield.
Impact: Positive