Coal India confident of strong demand over 10-15 years; stock at 52-week high

In the past one month or so brokerage houses like Credit Suisse and JPM have been quite bullish on Coal India. The company’s management in an interview with CNBC-TV18 said it expects coal demand to remain strong for the next 10 to 15 years.

The firm has a volume target of around 710 to 730 million tonnes odd compared to the initial target of around 740 million tonnes. However, most brokerages don’t expect it to go past 700 million tonnes.

On pricing, the management sounded confident as it said while the e-auction prices were at a 40 percent premium, it was optimistic it could push through a 10 percent price increase in the fuel supply agreements (FSA).

Therefore, the key reasons for Coal India to go ahead and increase prices would be rising costs of explosives, higher diesel prices, and the impendingwage-price increases.

On the other hand, the balance sheet for the company is shaping up quite well. Receivables are down from around Rs 20,000 crore at the start of the fiscal to around Rs 13,000 crores odd and the cash in the books has moved around Rs 25,000 crores from around Rs 17,000 crores.

Meanwhile, the firm is also working on diversification particularly in the renewable space, and is targeting 3000 megawatts of solar energy by 2024.
Source: CNBCTV18


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