Coal India — Q2 FY24 earnings call

Call held 21 Nov 2023

Management summary

Coal India Chairman PM Prasad led a confident earnings call post Q2 FY24, reporting strong H1 performance with ~12% production growth and coal dispatches up ~9%. E-auction premiums remained robust at 90% average despite being lower than earlier peaks. MCL recovered from a 26-day Basundhara coalfield blockade. Management reaffirmed 780 MT FY24 target and guided 840 MT for FY25, with demand projected strong for next 6-7 years supported by 80 GW new power capacity.

Highlights

  • H1 production grew ~12% with coal production on track for 780 MT FY24 target

  • E-auction premium averaged 90% over notified price in H1; BCCL 56%, ECL 71%, CCL 114%, NCL 114%, MCL 107%

  • MCL production impacted by 26-day Basundhara coalfield blockade by villagers in July; now recovered

  • H2 e-auction target set at 15% of production with expectation to reach 20% if demand permits

  • October alone saw 33% coal-based power generation growth YoY

  • FY25 production target of 840 MT; FSA commitment of 610 MT for power sector FY24

  • Capex of Rs.16,500 crores for FY24; Rs.24,700 crores planned for FMC projects over 6-7 years

  • Employee cost expected at Rs.46,000 crores for FY24; non-exec wage revision due 2026, exec 2027

Key financials

3 periods

Headline

  • FMC Investment
    ₹24,700 Cr

H1

  • Offtake
    360.66 million tonnes
    YoY +9%
  • Power Sector Dispatches
    295.36 million tonnes
  • Non-Power Dispatches
    60 million tonnes

FY24

  • Capex
    ₹16,500 Cr
  • Employee Cost Est.
    ₹46,000 Cr

What they filed

Q1 FY27: revenue up 7.8%, net profit up 0.7% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue31,182 36,859 37,825 42,919 30,187 −3%34,924 −5%46,490 +23%46,255 +8%
EBITDA8,617 12,317 11,790 12,588 6,716 −22%9,331 −24%12,673 +7%12,069 −4%
Net profit6,275 8,491 9,593 8,788 4,263 −32%7,166 −16%10,908 +14%8,850 +1%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

Share of FY24 Target
245 million tonnes Total
  • MCL 204 million tonnes 83.3%
  • BCCL 41 million tonnes 16.7%

Guidance & targets

Production

  • FY24 Production Production · FY24 · High confidence 780 million tonnes
    780 million ton coal production...780 million ton dispatch also we are supposed to do

    — P M Prasad

  • FY25 Production Production · FY25 · Medium confidence 840-850 million tonnes
    next year it is 850

    — P M Prasad

E-auction

  • H2 E-auction Volume E-auction · H2 FY24 · High confidence 15% of production
    15% of production, you can say, roughly

    — P M Prasad

Demand

  • Coal demand outlook Demand · Long-term · High confidence Sufficient for next 15-20 years
    for the next 15 to 20 years coal requirements will definitely will be there

    — P M Prasad

Risks & concerns

  • MCL production vulnerable to land disputes and local agitation

    medium

    26-day Basundhara blockade in July caused production loss; management resolved with Chief Secretary intervention

    Management acknowledged

  • E-auction premium volatility impacting revenue predictability

    medium

    Premiums volatile from 50-60% to 90% across quarters; linked to power plant stock levels and international prices

    Analyst acknowledged

  • Railway evacuation constraints at SECL and MCL limiting production

    medium

    5 fewer rakes daily at Korba and Talcher fields; infrastructure projects underway to add 50 rakes capacity

    Management acknowledged

  • No FSA price hike expected for power sector in next 7-8 months

    low

    Non-power prices may see revision but power sector FSA untouched for next year

    Management acknowledged

Areas of evasion (1)

  • FMC payback period details somewhat vague

Q&A highlights

3 direct
MCL production recovery post Basundhara blockade Direct
MCL...target of 204 million will be ensured...the company is in a growth trajectory

MCL is the largest subsidiary; 26-day blockade raised concerns about operational risk, but recovery confirmed

Asked by Amit Dixit

Cost reduction through FMC projects and safety benefits Direct
in one project INR25 crores and another project INR50 crores for one year only...dust emissions reduced by 75% to 80%

Quantifies ROI of Rs.24,700 crore FMC investment beyond just logistics - includes environmental and safety benefits

Asked by Ashish Kejriwal

MDO operations status and incremental production Direct
15 projects...one underground project started...FY25-26 it will be around 55-60 million

MDO contribution trajectory critical for achieving 1 BT target - 55-60 MT expected by FY26 from these projects

Asked by Kirtan Mehta

1 min read 4 chapters

Detailed narrative

Strong H1 with Operational Resilience

CIL delivered robust H1 FY24 with ~12% production growth and 9% offtake growth despite MCL's 26-day Basundhara blockade. All subsidiaries except SECL are ahead of targets. October saw 33% coal-based power generation growth, with demand monitored through twice-weekly subgroup meetings across 3 ministries.

E-auction Strategy and Premiums

E-auction premiums averaged 90% across CIL in H1, ranging from BCCL's 56% to CCL and NCL's 114%. Of 51 MT offered, 45.6 MT was booked. Management targets 15% of production for H2 e-auction volumes with potential to reach 20%. Priority remains fulfilling 610 MT power sector FSA commitment.

MDO and Underground Mining Expansion

15 MDO projects initiated, with production started at 1 open-cast (CERWL, MCL) and 1 underground (SECL). Incremental MDO production expected at 20-25 MT in FY25, scaling to 55-60 MT by FY26. Underground production target of 100 MT by 2030 from current 25 MT using continuous miner technology, with cost ~2x of open-cast at Rs.2,100-2,200/tonne vs Rs.1,000/tonne.

Evacuation and Distribution Infrastructure

Rs.24,700 crore FMC investment over 6-7 years reducing loading time from 3.5-4 hours to 45 minutes. CERL line at Raigarh commissioned with PM inauguration. Third line at Jharsuguda-Barpali under construction. Employee count at 235,000 with 5% annual attrition through natural retirement; non-exec wage revision due 2026, executive 2027.

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