- 25 Apr 2024
- ICICI Securities
Company to face stiff competition from captive mines
COALINDIA - 475 Change: 20.70 (4.56 %)News: As per media sources, Coal India is expected to witness stiff competition and potential demand decline from existing coal buyers (possessing captive mines) by ~20% to ~58% post FY26E. In FY23, the company supplied ~691.3 million tonnes (MT) of coal to its top 50 power and top 50 non-power buyers, who currently possess mining rights to over ~404.6 MT of coal capacity through captive mines.
Views: Media articles also mention that 19 out of top 50 power sector buyers, and 11 of the top 50 non-power sector buyers possess their own captive coal blocks with the production capacities of ~242.2 MT and ~44.5 MT, respectively. This anticipated decline in demand could potentially impact the company’s revenue and profitability going forward with some mitigation being offered by organic growth in coal demand due to addition of thermal capacity amid government’s focus on 24*7 power supply pan India and import substation opportunity (at ~180 MT). It is sentimentally tad negative for the company.
Impact: Negative