- 13 Jun 2024
- ICICI Securities
GOVERNMENT TO ESTABLISH COAL TRADING EXCHANGE
COALINDIA - 399 Change: -0.40 (-0.10 %)News: As per media sources, the government is keen on establishing India's first coal trading exchange as part of its action plan for the first 100 days. This exchange would allow more sellers and buyers to trade coal as a commodity, extending beyond term linkages. Additionally, any surplus stock held by state-run Coal India Ltd after fulfilling long-term linkage commitments is likely to be traded on the proposed exchange.
Views: This coupled with previous news item of government working on increasing coal availability to non-regulated sectors such as steel, cement etc., is likely to put some pressure on e-auction volumes as well as realisations at Coal India which is the most profitable segment for the company. This can potentially lower the earnings growth for the company going forward. The stock however trades inexpensive at <5x EV/EBITDA on forward basis with healthy dividend yield of ~5%.
Impact: Negative