Coal India — Q3 FY24 earnings call

Call held 19 Feb 2024

Management summary

Coal India delivered a strong Q3 FY24 with highest-ever 9-month production of 531.90 MT, growing 11% YoY. Revenue crossed Rs.1 lakh crore for first 9 months. E-auction premiums spiked above 100% in Q3 due to low power plant stocks in September and record peak power demand of 240 GW, but moderated to 36-48% in January-February. Management remains confident of achieving near 780 MT production for FY24, with FY25 target set at 838 MT.

Highlights

  • Highest ever 9-month coal production of 531.90 MT with 11% growth; overburden up 22%

  • Highest ever 9-month PBT of Rs.31,937 crores (+5% YoY) and PAT of Rs.23,849 crores

  • Highest ever 9-month revenue from operations of Rs.1,04,914 crores (+5% YoY)

  • E-auction premium exceeded 100% in Q3; moderated to 36-48% range in Jan-Feb 2024

  • Production target of 780 MT for FY24; 5 of 7 subsidiaries ahead of target, SECL lagging by 8-9 MT

  • FY25 production target revised to 838 MT (from 850 MT) due to high stocks at power plants

  • Second interim dividend of Rs.5.25/share; total FY24 interim dividend of Rs.20.50/share (205% of face value)

  • Capex of Rs.5,702 crores in Q3; on track for Rs.16,500 crores for FY24

Key financials

3 periods

Headline

  • Market Capitalization (31 Dec)
    ₹2.32L Cr

9M

  • Revenue from Operations
    ₹1.05L Cr
    YoY +5%
  • PBT
    ₹31,937 Cr
    YoY +5%
  • PAT
    ₹23,849 Cr
  • Coal Production
    531.9 million tonnes
    YoY +11%
  • Overburden Removal
    1,404.85 million cubic meters
    YoY +22%

FY24

  • Capex Target
    ₹16,500 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

  • Power Sector
    454.03 million tonnes 9M Power Dispatches610 million tonnes FY24 Power Requirement
  • E-auction
    80% FY24 Average Premium (9M)42% Jan-Feb 2024 Premium

Guidance & targets

Production

  • FY24 Production Target Production · FY24 · High confidence 780 million tonnes
    780 million tons is our target, and we are all set to go

    — P M Prasad

  • FY25 Production Target Production · FY25 · Medium confidence 838 million tonnes

    Previously 850 million tonnes → 838 million tonnes

    838 million tons...keeping that 838 million tons, one target is kept...850 initially

    — P M Prasad

E-auction

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

    — P M Prasad

Capex

  • FY25 Capex Capex · FY25 · High confidence Rs.17,500 crores
    It is almost INR17,500 crores

    — P M Prasad

Employee Cost

  • FY24 Employee Cost Employee Cost · FY24 · High confidence Less than last year by ~Rs.2,000 crores
    employee cost will be less than the last year to the tune of around INR2,000 crores

    — Management

Risks & concerns

  • E-auction premiums moderating sharply from Q3 highs above 100% to 36-48% range

    medium

    Q3 spike driven by record 240 GW peak demand and low power plant stocks; management expects 40-50% to be the new normal

    Both acknowledged

  • SECL production lagging target by 8-9 MT due to land issues at mega projects

    medium

    SECL target 197 MT vs actual tracking at ~10 MT shortfall; other subsidiaries trying to compensate

    Management acknowledged

  • Receivables jumped from Rs.13,000 to Rs.17,000 crores

    medium

    Management in constant pursuit with NTPC, DVC, WPDCL, Mahagenco; expects range to stabilize

    Analyst acknowledged

  • FY25 production target reduced from 850 to 838 MT due to high coal stocks

    low

    Stock buildup at power plants above 38 MT and at CIL side creating temporary oversupply

    Management acknowledged

Areas of evasion (1)

  • Exact capex breakdown between coal and non-coal not immediately available

Q&A highlights

2 direct
E-auction premium sharp drop from Q3 levels above 100% Direct
e-auction premiums have started now actually getting away from the linkage with the imported coal prices...40% to 50% is going to be the order of the day

Clarifies that domestic coal availability is decoupling e-auction premiums from international prices, signaling structural moderation

Asked by Venkatesh Subramanian

OBR stripping activity accounting policy change impact Partial
we are going to comply the standards, as mentioned in the International Standards of Accounting...impact will we are working on it

Change in OBR accounting policy could have significant impact on reported financials and tax liability reversal

Asked by Indrajit

Marketability of 1 billion tonnes production given captive mines Direct
80,000 megawatts power plants are coming by 2030...this year, we are giving more to power plants. And next year also power plant projection is 50 million tons more

Addresses key concern about demand sustainability with 80 GW new capacity and import substitution opportunity

Asked by Amit Murarka

1 min read 4 chapters

Detailed narrative

Record 9-Month Performance

CIL achieved highest-ever 9-month production of 531.90 MT with 11% growth, backed by 22% overburden removal growth. Revenue from operations crossed Rs.1 lakh crore mark at Rs.1,04,914 crores. PBT stood at Rs.31,937 crores, up Rs.1,579 crores YoY. Five subsidiaries are ahead of targets with only SECL lagging due to land issues at mega projects.

E-auction Premium Normalization

Q3 FY24 saw e-auction premiums spike above 100% driven by power plant stocks falling to bare minimum of 90 MT in September and peak demand hitting 240 GW. However, premiums moderated sharply to 36-48% in January-February 2024. Management attributed the normalization to increased domestic coal availability decoupling from international prices, expecting 40-50% to be the new normal.

Production and Evacuation Infrastructure

FY24 production target of 780 MT is largely on track with potential minor shortfall of ~10 MT at SECL. FY25 target revised down to 838 MT from 850 MT due to high coal stocks. Chairman confirmed evacuation infrastructure is being enhanced with Tori-Shivpur third line, Jharsuguda-Barpali commissioning, and continued FMC project rollout with Rs.24,700 crores investment over 5 years.

Coking Coal and Diversification

Washed coking coal production target of 8 MT by FY30, with current levels at 1.5-2 MT. New washeries at Madhuband (commissioned), Bhojudih (by July), and 10 MT non-coking coal washery at Lakhanpur commissioned. Solar target of 3,000 MW with 250 MW to be operational by FY24 year-end. Critical mineral exploration in 3 blocks with Australia due diligence underway.

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