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Coal India Ltd

| Transcript of Investors

NEUTRAL SENTIMENT

Report Source

⬤14th May 25

Summary : Coal India projects significant volume growth driven by infrastructure improvements and diversified demand, despite operational delays and potential cost increases.

Management Perspective positive : Management expects at least double-digit growth in e-auction volumes. Anticipates 30-40% e-auction premium with strong power plant stock. Not worried about increasing e-auction volumes to 20%.

Concall Report Analysis & Insights

Business Overview

  1. Coal India is a major coal producer in India.
  2. Experienced flat volumes in FY25 due to operational issues.
  3. Projects significant volume growth for FY26 and FY27.
  4. Focusing on increasing supplies to the non-power sector.
  5. Implementing First Mile Connectivity projects for efficiency.

Future Growth Prospects

  1. FY26 volume guidance is 875 million tonnes.
  2. FY27 volume guidance is over 900 million tonnes.
  3. First Mile Connectivity rake loading expected to grow 20% this fiscal.
  4. 900 MT capacity enabled by first mile connectivity by 2029-30.
  5. Targeting 25% supplies to the non-power sector.

Management Insights

  1. Closely monitoring production from two subsidiaries for guidance.
  2. Factored in the impact of captive and commercial coal production.
  3. Offtake projected 25 MT more than production this year.
  4. CIL aims to meet market demand and reduce import reliance.
  5. Acknowledges project implementation challenges are slightly tricky.

Signs of Skepticism

  1. Analyst questions 15% volume growth target as optimistic.
  2. Tax on minerals case liability of 35,000 crores remains unbooked.
  3. OBR liability unwinding timeline of 3-5 years seems long.
  4. E-auction booking rates declined significantly from 98% to 63%.

Risk Factors

  1. FY25 volumes were flat due to heavy rainfall and land acquisition.
  2. Railway line projects face delays from land acquisition and EC guidelines.
  3. SCCL and Mahanadi face significant railway infrastructure issues.
  4. Full utilization of 150 MT capacity depends on railway rake availability.
  5. States can impose royalties, potentially increasing coal prices.

Good To Know

  1. New Shakti scheme offers nomination-based linkages to gencos.
  2. Scheme provides short-term (7yr) and long-term (25yr) power sourcing windows.
  3. Flexibility for existing players to switch linkages.
  4. No specific MDO target; mode chosen based on economics.
  5. Road mode used for local demand within 50km.

Key Drivers

  1. Increased FY26/FY27 volume guidance.
  2. First Mile Connectivity projects boosting efficiency.
  3. Growing demand from non-power sector.
  4. Potential to replace significant coal imports.

Key Analyst Discussions

Competitive Environment

  1. Captive and commercial coal production to reach 320 MT.
  2. New power sector capacities increase CIL demand.
  3. Imports for blending have reduced to zero.
  4. Potential to replace 60-100 MT of imported coal.

Market Trends & Consumer Behavior

  1. Anticipating 30-40% e-auction premium.
  2. Power plant stock of 54 million tonnes supports premium.
  3. Huge unmet demand from sponge iron sector.
  4. Ministry of Power projects 686 MT demand for CIL in FY26.
  5. E-auction prices correlate with imported coal prices.

Financial Highlights

  1. Q4 e-auction premium was 43%, current is similar.
  2. Historical premiums typically range 35-40%.
  3. Current stripping ratio is 2.67 and consistently increasing.
  4. Last year's total capex was over 19,500 crores.
  5. Non-executive wage revision due in June 2026.

Product Composition

  1. BCCL produces only coking coal.
  2. Planning three coking coal washeries.
  3. Lack of washing capacity limits full coking coal utilization.
  4. Washery monetization and linkage reforms for steel sector.

Strategic Considerations

  1. E-auction policy targets 10-20% of production.
  2. Prioritizes long-term FSA consumers over maximizing e-auction revenue.
  3. Gasification project feasibility under evaluation.
  4. Offering 5-10 year long-term contracts to reduce import reliance.