Coal India Declares Q3 Results: Expert’s View Behind the 70% Jump in Net Profits

A coverage of Coal India’s Q3 performance

Coal delivers good Results

Coal India is the largest player in the coal sector and was a monopoly till less than two years ago. It is a public sector enterprise owned by the Coal Ministry. The world’s largest state-owned coal company released its quarterly earnings and performance numbers on 31 January 2023. It is safe to say that the company has surpassed most street estimates to post impressive figures in their latest quarterly results.

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Coal India Q3 Snapshot

  • Profit: Profit for the quarter ended December 2022 was Rs 7,755.55 crores. Profit during the same period last year was Rs 4,558.39 crores. This is a 70.13% increase in profit.
  • Revenue: Coal India’s revenue for the October-December 2022 quarter stood at Rs 34,169 crores, compared to Rs 28,433 crores in Q3 2021-22. This amounts to a 23.7% rise in revenue year-on-year.
  • Realisation per ton of coal was Rs 1,482 in quarter 3 this year, which is an 8.2% increase compared to last year.
  • The operating margin for the quarter was 29.5% in Q3 2022-23, up from 24% in Q3 of the previous year.
  • The expenses during the quarter amounted to Rs 26,246.44 crores, which increased from Rs 22,780.95 crores in Q3 of the previous year.

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Experts View

Motilal Oswal Financial Services has commented that Coal India’s Q3 results indicate a decent performance. It also added that profit growth in e-auctions will benefit from management guidance on coal availability for e-auctions. The firm has predicted a robust outlook for the coal giants. 

Jefferies commented that higher global coal prices have helped the rise in e-auction sales. Kotak Institutional Securities also said that the earnings could continue to see positive movements owing to the higher prices for e-auction sales. However, it pointed out the threat of under-provisioning of wages. It said that Coal India has been making a lower provision of wages for the last 15 months. The settlement of a 19% revision in employee cost retrospectively effective from 1 July 2021 could dent the profit numbers in FY23. This is estimated to be an under-provisioning of around Rs 60 billion, which could become a part of the P&L in the second half of 2023-24. Kotak also said that a decline in imported coal prices can also weigh on the earnings in the near future.

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It remains to be seen how Coal India books the possible retrospective increase in the wage bill, and when such booking is required. For now, Coal India’s board approved the disbursal of a second interim dividend for the current financial year, Rs 5.25 per share. Coal India share price went over Rs 228 per share on the day of the Q3 earning release but has since fallen to Rs 217 at the time of writing.



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