Coal India needs a volume boom to fire growth

Copyright © HT Digital Streams Limit all rights reserved. Ashish Agrawal 2 min Read May 12, 2025, 12:30 PST Kotak Institutional Shares Skad that the shipping of coal India will grow 5.4 % in FY26, from 1.3 % in FY25, due to the delay in the implementation of thermal power projects. (File Photo: AFP) Summary Coal India is working on higher volumes, stable e-auction prices and premium coal to increase FY26 earnings, but the increase in prisoner coal production can limit upside down. Coal India Ltd (CIL) consolidated ebitda for the March quarter (Q4FY25), adjusted for the return tax from removal, rose a year-on-year by 5% to £ 11,200, which matched the expectation. The increase is a recovery after two consecutive quarters of ebitda decline, powered by cost control measures and the stabilization of e-auction prices. The cost of employees, which accounts for more than 40% of the total expenses of Cil, fell 11% in the third quarter. However, on a full annual base, EBITDA fell 3% to £ 43,000 in FY25, with lower e-auction prices, despite a 5% reduction in the e-auction staff. FY25 income was flat at £ 1.43 trillion, with volumes subdued. Read it | However, Coal India Banks at emerging power stations to accelerate the growth of the prospects for FY26 look more optimistic, with the prices of the e-auction that signs from bottom and volumes are expected to rise. E-auction prices, which dropped almost 20% in the first nine months of FY25, amid a global coal price shutdown, have taken up slightly in the third quarter and are expected to remain stable. In addition, a recent imposition in levy with one of its subsidiaries, the first price increase in almost two years, can increase mixed realization. Kotak Institutional Shares estimate that Cil’s shipping will grow 5.4 % in FY26, from 1.3 % in FY25, due to the delay in the commissioning of thermal power projects. Although 32GW of under construction coal-based power projects offers the visibility of medium-term volume, one challenge is the increasing part of the coal production of other companies in prisoner, from 15% in FY24 to 19% in FY25. In FY25, Cil has put in use its largest coal washing plant, which can increase the share of coal with a higher quality. Crop and E-Action coal reached 130% and 70% premiums on the price of fuel supply agreement (FSA), and together the last financial year was almost 14% of the total volumes of the company. Read it | Parikh Mutual Fund Buy Coal India: Value or Trap? The company also diversifies into clean energy. It entered into a joint venture with Gail to develop a coal-to-gas synthesis project. In addition, Cil signed a memorandum of understanding with AM Green to deliver 4500 MW of renewable power for its Green Ammonia facilities, which were completed by 2030. This initiative would need an £ 25,000 investment, which implies £ 5,000 over the next five years. FY25 Capex was £ 13,000 crore, largely for the expansion of coal dazzling infrastructure. Read also | Power Game: Can Coal India face the windwinds? Cil’s shares have so far been largely flat in 2025 and traded at an enterprise value of 4.4x FY26 estimated EBITDA, according to Bloomberg data. A collection in volumes and a better e-auction premium holds the key to the performance of the stocks. Catch all the business news, market news, news reports and latest news updates on Live Mint. Download the Mint News app to get daily market updates. More Topics #Berk to make #Coal India Mint Specials