During Friday’s trading session, the shares of this Maharatna company and the single largest coal producer in the world, moved up by around 5 percent on BSE.
Established in 1975, Coal India Limited (CIL) is primarily involved in the business of mining and production of coal. The major consumers of the company are the power and steel sectors, with additional consumers in sectors such as cement, fertilizers, and brick kilns.
In this article, we explore how Coal India stands to benefit from the ongoing surge in power demand across India.
Price Movement:
With a market capitalisation of Rs. 2.41 lakh crores, the shares of Coal India Limited closed in the green at Rs. 392, up by nearly 4.6 percent, as against its previous closing price of Rs. 374.7.
The stock has delivered negative returns of about 14 percent in the last one year, but gained around 3.4 percent in the last one month.
Rising Power Demand and Coal Consumption
India is experiencing a significant surge in power demand, driven by economic growth and rising temperatures this summer. This increased demand has led to a greater reliance on coal-based power generation, directly benefiting CIL, the country’s largest coal producer.
As per sources, India’s peak electricity demand will grow by 9-10 percent during the summer of 2025 due to more frequent heatwaves and increased use of air conditioners. This uptick in electricity consumption has necessitated higher coal production to ensure an adequate power supply. Consequently, India’s thermal coal production is projected to reach 1,800 million tonnes (MT) by 2033 to meet this escalating demand.
Coal India’s Production Milestones
In response to the growing need for coal, India achieved a historic milestone by surpassing one billion tonnes of coal production in FY25, marking a 4.99 percent growth compared to the previous year. Coal India Limited played a pivotal role in this achievement, contributing significantly to the increased output.
The government has undertaken a few coal gasification initiatives. As part of this strategic push, CIL has received approval to invest in joint ventures with BHEL and GAIL for coal gasification projects.
While India is investing in renewable energy sources, coal continues to dominate the energy mix, fueling over 74 percent of the country’s electricity generation. This reliance underscores CIL’s strategic importance in ensuring energy security. The company is poised to benefit from ongoing and future coal demand, even as the nation gradually transitions to cleaner energy alternatives.
Management Guidance on Capacity:
In early March 2025, Coal India Chairman P.M. Prasad announced that the company expects to produce 788 MT and achieve an offtake of 765 MT in FY25. This marks a revision from the initial production target of 838 MT, which was later adjusted to 806–810 MT in January.
During FY24, the company recorded a production of 773.65 MT, reflecting a robust year-on-year growth of 10 percent. For the current fiscal, both production and offtake are projected to rise by approximately 1.5 percent, compared to 10 percent and 8.5 percent growth, respectively, in the previous year.
Major Events in Q3 FY25:
Solar Power Project: In November 2024, Coal India commissioned a 50 MW solar power plant at Northern Coalfields Limited (NCL) in Nigahi.
Coal to Synthetic Natural Gas Project: On 2nd December 2024, CIL signed an MoU with BPCL to explore the setting up of a Coal to Synthetic Natural Gas (SNG) project at Western Coalfields Limited (WCL) through Surface Coal Gasification.
Govt. Incentive for Gasification Projects: The Ministry of Coal (MoC) awarded Letters of Award (LoA) for a financial incentive of ₹1,350 crore for each of the three planned coal gasification projects.
Expansion into Critical Minerals: On 6th January 2025, Coal India signed an MoU with IREL (India) Limited to jointly develop assets related to critical minerals.
Financial Performance:
Coal India reported a marginal decline in revenue from operations, experiencing a year-on-year fall of nearly 1.03 percent, from Rs. 36,154 crores in Q3 FY24 to Rs. 35,780 crores in Q3 FY25.
Similarly, its net profit decreased during the same period from Rs. 10,292 crores to Rs. 8,491 crores, representing a decline of nearly 17.5 percent YoY. The company attributed this decline to softer demand and reduced coal offtake during the period.
Conclusion:
The surge in India’s power demand has reinforced the critical role of Coal India Limited in the energy sector. The company’s increased production capacity and strategic initiatives position it to capitalize on the current and anticipated demand for coal, ensuring its continued relevance in India’s energy landscape.
Written by Shivani Singh
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