- 03 Dec 2024
- ICICI Securities
COAL INDIA REPORTED FLATTISH VOLUME PRINT FOR NOV’24; SIGNED MOU WITH BPCL FOR COAL TO SYNTHETIC NATURAL GAS PROJECT
News: Coal India reported a flattish volume print for October 2024. Production volume grew by 1.7% YoY at 67.2 million tons (MT) with cumulative production in FY25 on YTD basis reaching to 471 MT (up 2.4% YoY). Similarly, offtake volume stood at 63 MT (flattish YoY) and 493 MT (up by 1.5% YoY), respectively. Additionally, the company has executed a Non-Binding MOU with Bharat Petroleum Corporation Ltd to explore setting up of Coal to Synthetic Natural Gas Project through Surface Coal Gasification under its subsidiary Western Coalfield Ltd. Moreover, the company have been selected for financial incentives for coal gasification projects.
Views: Coal India’s overall production came in below our estimates, achieving just 56% of its FY25 production target of 838 MT. The recent MOU signed with BPCL signify as one of the key diversification initiatives by the company to boost the revenue streams beyond traditional coal mining. Additionally, being chosen for financial incentives under a scheme worth Rs 8,500 crores marks a positive development for the company. 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: Neutral