Fundamental Wringer of Coal India: The share price of Coal India, the largest coal visitor in the world has returned an impressive 57% in the last two years. The gains come on the when of the rising Coal sales as the government pushes for increasingly electricity penetration wideness the nation. But, is there increasingly to it? Or all the rally is washed-up and you are late to the party? In this article, we’ll try to know it by conducting a fundamental wringer of Coal India Ltd.

Fundamental Wringer of Coal India

We’ll uncork the vendible by getting ourselves familiar with the merchantry of the company. Next, we’ll do a quick SWOT wringer and read well-nigh India’s coal sector. Without that, we’ll race through the financials of the stock and have a review of the future plans of the company. A summary concludes the vendible in the end.

Company Overview

Coal India Ltd. (CIL) is the largest coal visitor in the world. It is a Maharatna-status government visitor under the Ministry of Coal, Government of India. The inside public sector undertaking was incorporated 48 years ago in 1975.

CIL is structured as a holding visitor owning 84 mining areas wideness 8 Indian states through its various subsidiaries. As of April 1, 2022, the visitor had 318 mines.

Coal India finance for scrutinizingly 80% of the overall coal produced in the country. The visitor matches 40% of the primary commercial power demand alone. Its scale of operations can be gauged from the fact that it produced a whopping 623 million tonne (MT) of coal during the FY 2021-22.

The mining and sale of coal is the main revenue stream for the company. Apart from this, the loading & spare transportation charges and evacuation facility charges form part of other operating income. In simple terms, these are logistics services that are provided to the customers of Coal India. The sale of coal rumored for 91.71% of the total operating income of the visitor in FY22.

SWOT Wringer of Coal India

Strengths

1. CIL enjoys economies of scale given its large scale of operations.
2. Its huge coal resources and operations network is spread wideness the country helping it to cater to its customers easily.

Weaknesses

1. Coal India has upper wages forfeit hurting its margins.
2. Additionally, coal production is plush in underground (legacy) mines.

Opportunities

1. The visitor is putting efforts to diversify into the solar sector.
2. Rural electrification and the Power for All UDAY scheme will increase the demand for energy in India significantly.

Threats

1. Renewable energy production is one of the biggest threats to coal-based power generation.
2. Land vanquishment and the rise in the forfeit of land are other threats that can counter CIL’s efforts to produce increasingly coal.

Industry Overview

India is the second largest coal producer in the world. The country produced 777.03 MT of coal in the financial year 2021-22. The government has a huge influence on the Indian coal industry with state-owned companies Coal India and Singareni Collieries Company.

Talking well-nigh the demand, the energy sector in India is dependent on coal as 55% of the installed generation topics is coal-powered. According to the Draft NITI Aayog Report (Nov’21) on “Coal Demand in India – 2030 and beyond”, the coal demand for power production will stay strong and plane increase in the coming years as the nation plans to increase its energy production in the future.

However, the share of coal is projected to come lanugo in percentage terms as the nation will move remoter towards renewable energy. The reduction of coal in India’s energy mix is unscientific to shrink to 52% by 2030 (from 72% at present), 43% by 2035, and 34% by 2040.

India’s per capita yearly power consumption at 1,276 in FY21 was much lower than plane other developing countries like South Africa and Brazil. Thus, the overall power demand in India is expected to grow at a strong pace.

A variety of factors: rising living standards, higher electrical and electronic utilization penetration plane wideness rural areas, increasingly focus of the government on boosting the manufacturing sector’s contribution to GDP growth, construction of data centers, and largest irrigation through electric pump sets in the agricultural sector will contribute to higher energy demand in the years to come.

Coal India – Financials

Revenue & Net Profit Growth

The operating revenue and profits of Coal India have grown inconsistently over the last six years. The top line expanded by 22% in FY22 to Rs 109,714 crore from Rs 90,026 crore last year. The marrow line grew by 37% during the same period to Rs 17,378 crore.

The earnings momentum is picking up. For instance, the trailing twelve-month (TTM) income and net profit without the December 2022 quarter results stood at Rs 132,806 crore and Rs 29,312 crore respectively.

The table unelevated shows the operating revenues and net profits of Coal India for the previous six financial years.

Operating & Net Profit Margin

The operating and net profit margins have remained strong over the years for the mining company. However, FY18 margins were depressed on the worth of a sudden increase in employee goody expenses from Rs 33,523 crore in FY17 to Rs 42,634 crore.

The table unelevated highlights the operating profit margins and net profit margins of Coal India for the past six fiscals.

Return Ratios: RoCE & RoE

Moving on to the efficiency analysis, Coal India is a profitable merchantry with a upper return on probity and return on wanted employed. There is a significant discrepancy between the RoE and the RoCE figures considering of various other provisions forming part of the non-current liabilities.

The table unelevated shows the RoCE and RoE of Coal India for the last five years.

Debt/Equity & Interest Coverage

Having covered the business, industry landscape, and P&L metrics of the company, we’ll now do a quick leverage study as part of our fundamental wringer of Coal India. It is largely a debt-free stock with a negligible debt-to-equity ratio and a high-interest coverage ratio.

Furthermore, stuff a government miner in the energy sector, the visitor enjoys a strong credit rating of CCR AAA/Stable from CRISIL.

The debt-to-equity ratio and interest coverage ratio of Coal India for the past few years are presented below.

Future Plans of Coal India

So far we looked at the past years’ data as part of our fundamental wringer of Coal India. In this section, we’ll try to make a sense of what lies superiority for the visitor and its investors.

1. CIL has targeted a coal supply of 700 MT in FY 2022-23, a 13% jump over the FY22 figure.
2. The would-be goal of the Government of India to supply electricity to every home 24×7 by 2025 presents a huge opportunity for the visitor as this will result in the 1 billion tonnes (BT) yearly production of coal by 2024-25.
3. In line with its production goals, the CPSU has earmarked a large CAPEX of Rs 16,500 crore towards volume growth in the near future.
4. Furthermore, Rs 20,000 crore worth of railway track projects are under execution once to increase the evacuation of coal.

Fundamental Wringer of Coal India – Key Metrics

We are now scrutinizingly at the end of our fundamental wringer of Coal India. Let us take a quick squint at the key metrics of the stock.

In Conclusion

The increase in the sale of coal has definitely reverted the fortunes of Coal India and its investors in the last two years. Interested investors will have to closely follow the offtake figures and CAPEX plans of the visitor to see where the stock is going.

After going through our fundamental wringer of Coal India, do you think the visitor will be worldly-wise to increase production in the coming quarters? What can be speed bumps for the stock? How well-nigh we protract our conversation in the comments below?

You can now get the latest updates in the stock market on Trade Brains News and you can moreover use our Trade Brains Stock Screener to find the weightier stocks.

The post Fundamental Wringer of Coal India – Overview, Financials & More appeared first on Trade Brains.