Indian coal jumps 5%, trades near 52-week high following report on price hikes

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Shares of Coal India gained 5 percent to Rs 161.90 on BSE in intraday trading on Wednesday, after gaining 9 percent in the past three trading days, following a report that the company could increase dry fuel prices by at least 10-11 percent to mitigate the impact of rising costs and an impending salary review.

The share of the state-owned coal mining company was trading near its 52-week high of Rs 164.90, hit on June 11, 2021.

Over the past week, Coal India outperformed the market by gaining 13% against a 6% rise for the S&P BSE Sensex. An upward movement in Coal India’s stock price has helped the company regain a market capitalization of Rs 1,000 billion today. As of 2:25 p.m., the stock traded up 4.4% to Rs161.50, with a market cap of Rs.1002 billion, according to BSE data.

According to a PTI report, Coal India has informally discussed the issue with board members and most of them recognized the need to increase coal prices. The miner waits for the government sign, after which he will take the last call. CLICK HERE FOR THE FULL REPORT

Coal India saw a marked improvement in three respects in August. Resilient volumes despite a lean month, a continued reduction in contributions from state power producers, and strong electronic auction revenues were the highlight of the month.

There are concerns that coal is under pressure to divert high-margin electronic auction volumes to electric utilities under a linkage / fuel supply agreement (FSA) due to the increased demand for electricity and low stocks in power plants.

However, analysts at Prabhudas Lilladher see no risk to its electronic auction volumes as demand for electricity would start to decline in October, the seasonal increase in the movement of COAL volumes and a large chunk of auction volumes. are already dedicated to public electricity services. “In light of improved operational performance and a strong outlook for conducting electronic auctions,” said the brokerage firm. It maintains an “accumulate” rating on Coal India with a target price of Rs 164 per share.

For FY 22E, Coal India has given a production target of around 630 to 640 MT and a harvest target of around 710 to 720 MT. Emphasis on the digitization of mines to increase the efficiency of overall capacity utilization, resulting in higher volumes of coal at lower cost.

“The company is working to close non-viable mines. The company’s underground mines employ around 43 percent of the workforce while contributing 5 percent of total production. Steps are being taken to phase out non-viable Coal India mines. Production from 12 of these underground mines has already been suspended, ”ICICI Securities said in a stock update.

Based on the demand projection in “Vision 2024” for the coal sector in the country and the subsequent demand projection on Coal India, a roadmap has been prepared to project a medium term production plan. in which Coal India envisioned coal production of 1 billion tonnes (Bt) in the year 2023-24 to meet the country’s demand for coal.

To achieve this goal, Coal India has identified major projects and assessed their related issues. The capital expenditure for the year 2021-2022 has been set at Rs 17,000 crore. Further, in accordance with the investment plan, Coal India has planned to invest substantial amounts in diversification projects, namely solar power, thermal power plant, revival of fertilizer factories, surface coal gasification (SCG), CBM, supply of rail cars etc during 2021-2022, ”the company said in its FY21 annual report.

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