Coal India is expected to post a 5 percent decline in net profit in the fourth quarter of FY23 on an almost 16 percent rise in consolidated revenue.
Profit is likely to drop 5 percent YoY and 18 percent QoQ to Rs 6,369.3 crore in the three months ended March, according to a poll of brokerages conducted by Moneycontrol. Revenue will likely climb to 37,830.4 crore from Rs 35,169 crore in the previous quarter and Rs 32,706 crore a year earlier.
“Coal India may post strong results on better offtake,” said Elara Securities.
The brokerage was of the view that the government-owned coal producer will report a 16.6 percent YoY increase in consolidated profit after tax to Rs 7,830 crore. Net revenue should rise 11.3 percent YoY to Rs 36,410 crore owing to higher coal offtake and higher e-auction realisation, up 64.7 percent YoY, it said.
Offtake was higher in Q4 at 3.7 percent YoY, while production was up 7.2 percent YoY, the brokerage said.
Total offtake in FY23 may have grown 12.9 percent with the company shoring up supplies to 695 million tonnes compared with 662 million tonnes in FY22.
Coal India’s production may have reached 703 million tonnes in FY23 against 622.8 million tonnes in FY22. Output in FY24 is projected at 780 million tonnes, Elara Securities said.
Coal India plans to scale up production, which it said last month rose 12.9 percent to a provisional 703.2 million tonnes in FY23 from 622.6 million tonnes in FY22.
Marginal dispatches growth
Company executives said it is likely to have 50 million tonnes of coal at its pitheads by the end of June even after dispatches to power utilities.
Coal India is scheduled to announce its fourth-quarter and annual results on May 8. The company’s shares have gained over 27 percent in the past one year.
For the quarter ended March, Kotak Institutional Equities sees marginal growth in dispatches at 187 million tonnes, up 3.4 percent YoY.
Coal India is hopeful of supplying 156 million tonnes of the fuel to the power sector during April-June 2023 amid concerns over a spike in coal demand. This would be 25.6 percent of the enhanced annual dispatch target of 610 million tonnes slated for this sector in FY24.
Kotak Institutional Equities expects blended realisations at Rs 2,186 per tonne in the fourth quarter of FY23, which reflect continued strength in e-auction pricing.
However, the domestic brokerage said an additional wage provision of Rs 6,000 crore on account of settlement of wage revisions in January 2023 will weigh on the company’s quarterly earnings.
The management’s guidance on coal availability for e-auctions is critical for the profitability of the company while the outlook on a price hike in fuel supply agreements is another key monitorable, according to Motilal Oswal Financial Services.
In April, JP Morgan said in a note that a price hike under supply agreements would help Coal India offset the impact of wage increases.
About 15 percent of Coal India’s output is sold through e-auctions, which typically help the company to get a significantly higher price for the fuel.
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