Coal India cuts volume guidance, moderates production target; here’s what analysts say

Coal India Ltd (CIL) shares fell on Tuesday, February 20, after the state-run mining major trimmed its 2023-24 volume guidance by one per cent but said it expects growth of 9.0 per cent in the next financial year. The PSU stock dropped as much as 4.3 per cent to Rs 441.4 apiece on BSE.

On an earnings call post-market hours on Monday, the coal behemoth moderated its production target from 780MT and 850MT to 770MT and 838MT for FY24 and FY25, respectively, citing land issues in one of the mines of its subsidiary South Eastern Coalfields Ltd (SECL).

Key takeaways from Coal India's Q3 earnings call 

Apart from a cut in volume guidance in FY24 and moderation in the production target, Coal India's management also guided for cooling off followed by stabilisation of its e-auction premium, or the price fetched by the company above the notified prices.

Zee Business analysts peg the company’s e-auction premium to decline from 117 per cent in Q3 to 40 per cent in Q4. 

Brokerage JM Financial expects the company’s e-auction premium at 40- 50 per cent in the final quarter of the current financial year as well as the nine-month period ending March 2024, and beyond. 

According to Motilal Oswal Financial Services, coal demand will be driven by domestic power generation, which is expected to grow 7.7 per cent to 1,750 billion units (bu) in FY24.

The brokerage points out that the reduction in the e-auction premium estimate by Coal India is in line with the recent trend.

Also Read: What brokerages recommend on Coal India 

Coal India share price performance 

Coal India shares have given a multi-bagger return of over 104 per cent in the past year, sharply outperforming a 24 per cent rally in the headline Nifty50 index. 

Catch the latest stock market updates here. For all other news related to business, politics, tech and auto, visit Zeebiz.com.

DISCLAIMER: The views and investment tips expressed by investment experts on zeebiz.com are their own and not those of the website or its management. zeebiz.com advises users to check with certified experts before taking any investment decisions.