- 06 Aug 2024
- ICICI Securities
Enters into JV Agreement with GAIL to set up a coal to synthetic natural gas project
COALINDIA - 491 Change: 6.65 (1.37 %)News: In a regulatory filing, Coal India and GAIL Ltd have announced a JV agreement to set up a coal to synthetic natural gas project at Eastern Coal Field in West Bengal. The JV will be a subsidiary company of Coal India Ltd, in which Coal India will hold 51% equity stake with rest 49% being held by GAIL.
Views: Coal Gasification is one of the key diversification initiatives by the company to boost the revenue streams beyond traditional coal mining. This environmentally friendly process, compared to coal combustion, produces syngas, ammonia, nitric acid, and ammonium nitrate, all essential for various industrial applications. Earlier, Coal India had formed a JV i.e. Bharat Coal Gasification & Chemicals with BHEL, which also focuses on producing syn-gas, Ammonia & Nitric Acid as intermediate products and Ammonia Nitrate as the end products. We maintain a positive outlook on Coal India, driven by the company’s ambitious goal of achieving 1000 MT of coal production by FY26, robust demand from the power sector, diversification into other segments like critical minerals and power segment, investments in new technology domains such as coal gasification, inexpensive valuation, and healthy dividend yield.
Impact: Positive