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Coal India's Profit Up 26% to 86.8B Rupees, Beats Estimates

Coal India's profit jumps 26% to $1 billion in Q4, driven by reduced staff costs and increased shipments.

By Bill Bullington

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5/2, 10:15 EDT
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Key Takeaway

  • Coal India Ltd. reports a 26% profit increase to 86.8 billion rupees, surpassing estimates due to lower staff costs and higher shipments.
  • Strategic investments boost production, aligning with India's energy needs amidst rising electricity consumption.
  • Stock nearly doubles in a year, reflecting strong market confidence despite a 9.5% drop in average revenue per ton due to increased inventory.

Profit Surge Amid Rising Demand

Coal India Ltd., the world's largest coal producer, reported a significant 26% increase in its fourth-quarter profit, reaching 86.8 billion rupees ($1 billion). This performance exceeded the average Bloomberg estimate of 76 billion rupees, showcasing the company's strong financial health. The profit boost is attributed to a combination of reduced salary expenses and an uptick in shipments. Specifically, the company managed to lower its staff salary expenses by 20% to 135.4 billion rupees, a strategic move following a previous increase due to a wage agreement with trade unions.

Record Investments in Capacity

Amid India's growing electricity consumption, Coal India has been pivotal in meeting the country's energy demands. The Kolkata-based miner achieved record output and shipments during the fiscal year, driven by substantial investments in mining capacity and infrastructure. This effort aligns with India's reliance on coal for energy security, especially as the country faces challenges in expanding alternative energy sources. The company's strategic investments are not only aimed at enhancing production efficiency but also at securing India's energy future.

Market Response and Operational Highlights

Coal India's operational success and strategic management have resonated well with investors, with the company's stock nearly doubling over the past year. This positive market response is further bolstered by optimistic brokerage forecasts, indicating strong investor confidence in Coal India's growth trajectory. During the quarter, the company witnessed a nearly 8% increase in shipments, accumulating 90 million tons of inventory by the end of March. However, this higher availability led to reduced competition for coal and lower e-auction premiums, impacting the average revenue per ton by a 9.5% decline.