Coal India Q4 Preview: Earnings likely to decline on lower volumes, weaker realization

Coal India

World’s largest coal producing company Coal India is expected to post a subdued net profit for the March quarter (Q4FY25), despite higher volumes, as blended realizations are likely to be under pressure.

Analysts are anticipating a largely flattish to marginally weaker performance during the fourth quarter earnings, scheduled on May 7.

According to a Moneycontrol poll of six brokerages, Coal India’s net profit is projected to decline by 8.75 percent year-on-year to Rs 7,748.20 crore and fall by 10.3 percent on a sequential basis. Revenue is estimated to rise 3.5 percent year-on-year to Rs 37,029.70 crore but is expected to decline quarter-on-quarter, as per estimates. EBITDA is forecasted to decline 10.6 percent year-on-year to Rs 11,016.50 crore and dip 2.8 percent sequentially.

Factors Driving Earnings

Volumes: In Q4FY25, Coal India reported coal production of 237 million tonnes (MT), marking a 2 percent decline year-on-year, while total offtake stood at 200 MT, down one percent on year. Analysts expect volumes to remain largely flat, with a marginal one percent dip year-on-year. Blended realizations are projected to soften by 1.5 percent year-on-year to Rs 1,673 per tonne.

EBITDA Performance: The earnings is being weighed down primarily by weaker EBITDA and elevated employee costs, a seasonal trend in the fourth quarter. Additionally, moderation in e-auction premiums is expected, reflecting a decline in global thermal coal prices.

E-Auction Premium: The average e-auction premium is projected to decline quarter-on-quarter to 55 percent in Q4 from 76.4 percent in Q3, influenced by a 22.5 percent drop in international thermal coal prices to $108 per tonne. However, on a YoY basis, e-auction performance showed improvement, with prices rising 2 percent to Rs 2,545 per tonne and e-auction volumes increasing by 22 percent to 21.5 MT. The sequential decline is partially offset by a modest improvement in coal grade mix, which lifted the FSA (Fuel Supply Agreement) price estimate to Rs 1,527 per tonne in Q4, up from Rs 1,514 per tonne in Q3.

What to Look Out For

Key areas to monitor in the quarterly results include the trend in e-auction realizations, which remain critical for profitability, and the share of e-auction volumes in total offtake. Furthermore, any announcement regarding an interim dividend will be a significant aspect to watch.

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