Founded in 1975 and based in Kolkata, Coal India Limited (CIL) is the world’s largest coal producer and a vital entity in India’s energy sector. As a ‘Maharatna’ company, CIL stands out for its large-scale operations and significant influence. The company accounts for around 80 percent of India’s coal production, with a major focus on supplying the power and steel industries.
Price Action
With a market capitalization of Rs.2.52 lakh crore, Coal India Ltd’s share price closed at Rs.410.40 on Thursday, rising 1 percent from its previous close. Coal India is a high dividend-paying stock with a dividend yield of 6.34.
Manufacturing Capacity
Coal India Limited (CIL), the largest coal miner globally, operates across 83 mining areas in eight Indian states through its subsidiaries. The company manages 322 mines, including 138 underground, 171 opencast, and 13 mixed mines.
Coal India aims to increase its coal production to 1 billion tonnes by 2024-25, aligning with the national goal. For the next fiscal year, CIL targets a record output of 838 million tonnes and anticipates initial stockpiles of 80 million tonnes, representing a more than 15 percent increase from the previous year.
The company plans to open five new mines with a total capacity of 14.3 million tonnes per annum and expand 16 existing ones. CIL has also launched 21 new projects and 36 expansion projects.
Financial Performance
As per its latest financial results, the company recorded consolidated revenue of Rs.30,673 crore, reflecting a 6 percent decrease YoY. Net profits also saw a 22 percent decline, totaling Rs.6,275 crore during the same period.
The company has shown remarkable growth in liquidity and earnings ratios. Its price-to-earnings ratio stands at 7.02, significantly lower than the industry average of 19.0. The company showcases a strong current ratio of 1.81 and a debt-to-equity ratio of 0.08, reflecting solid liquidity.
In terms of return ratios, the Return on Capital Employed (ROCE) and Return on Equity (ROE) stand at 52.0 percent and 63.6 percent, respectively.
Target Recommendation
ICICI Direct has issued a buy recommendation for Coal India Ltd., setting a target price of Rs.585.00, reflecting an upside potential of 43 percent from its current price.
Other leading brokerage firms, including Motilal Oswal, Emkay Global, and Axis Direct, have also recommended buying Coal India shares.
Future Outlook
Coal India Limited (CIL) has set a target to increase coal production to 1 billion tonnes by FY 2026-27, up from 773.647 million tonnes in FY 2023-24, reflecting a 10 percent year-on-year growth. The company plans to allocate Rs.15,500 crores in capital expenditure for FY 2024-25, with a focus on expanding into solar power and coal gasification.
Written by – Siddesh S Raskar
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