Analyst views: How will coal blocks ruling impact metal cos

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26 Aug, 2025 12:21

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Moneycontrol Bureau

The Supreme Court on Monday ruled that the allocation of around 200 coal blocks between 1993 and 2009 were illegal.

A snapshot of what brokerages are saying about the likely impact of the ruling on various companies:

Hindalco

CLSA: This judgement substantially reduces the probability of Hindalco getting the Mahan coal mine for the Mahan smelter or the Talabira-II coal mine for the Aditya smelter, which lowers the long-term profitability outlook for Hindalco’s India business.

BoAML: We see marginal impact from potential cancellation of Mahan and Talabira II coal block on our FY16e EPS and valuation as a) we expect limited (0.4mt) captive coal from Mahan in 2HFY16 and expect full ramp only by FY19 and b) we do not factor in Talabira II coal block in our estimates

Macquarie: Even in the worst case scenario where Hindalco is forced to import their total requirements, it remains profitable enough with interest coverage ratios in excess of 2x (two times).

JSPL

CLSA: Our estimates for JSPL don’t include any benefit from the Utkal coal mine but de-allocation of the existing coal mines will impact our consolidated FY16-17 EPS estimate by 28-30% (if the company sources entire coal via linkage) and by a higher 50-60% (if the entire coal comes from e-auctions).

BoaML: Utkal 1B coal block is critical for profitability of its Angul Steel and captive power project. We estimate EBITDA/tonne at Angul could be hit by around USD84/t in absence of captive coal. Assuming, worst casescenario of all coal blocks being cancelled, we estimate impact on FY16 EBIDTA could be 10-23 percent.

Macquarie: Even in the worst case scenario where JSPL is forced to import their total requirements, it remains profitable enough with interest coverage ratios in excess of 2x (two times)

Tata Steel

CLSA: : No impact since its captive coking coal mines were allocated pre 1993

Goldman Sachs: Tata Steel India gets 40% of its coking coal needs through captive coal mines; however, all these coal mines (mainly in West Bokaro and Jharia regions) were allocated pre-1993.

JSW Steel

CLSA: No impact as JSW does not have any operational/upcoming coal mines.

Goldman Sachs: JSW has no captive coal or iron ore mines in India and hence is not impacted.

Sesa Sterlite

Goldman Sachs: For Sesa Sterlite the Durgapur II/Taraimar coal block (4mt capacity) for Balco’s 1,000 MW captive power plant does not impact our valuation as we assume commissioning post FY16.

CLSA: This judgement means that the probability of Balco (51% sub of Sesa Sterlite) getting the mining lease signed for its captive coal mine reduces substantially. This will impact future profitability of Sesa Sterlite’s aluminium business.