CIL's prospects expect to rise amid increased power demand
CIL's prospects expect to rise amid increased power demand
COAL & MINING

CIL's prospects expect to rise amid increased power demand

Coal shortages and rising power demand amid an intense summer have increased prospects for Coal India Limited (CIL).

With a strong demand driving prices for fossil fuel, domestic coal prices are also being supported by high international prices. Cheaper coal imports can help drive e-auction realisations.

With CIL set to gain sales volume and realisation front, earnings expectations are improving, resulting in a sharp uptick in the stock price.

Its sales volume at 662 million tonnes (mt) marked a 15% rise from FY21. Besides, its pit-head inventory at 57 mt in March is considered less because of the inadequate stock level at power plants.

According to the analysts, CIL's overall volume outlook remains strong. It expects off-take to accelerate from seasonally strong demand and high import prices. Besides, increased production at Bharat Coking Coal Limited (BCCL) and profitable subsidiaries, including Mahanadi Coalfields Limited (MCL), South Eastern Coalfields Limited (SECL) and Northern Coalfields Limited (NCL), are likely to expand margins.

CIL's supplies to the power sector have increased by 14.2% in the first half of April, from the same period last year to 1.64 mt. Its production increased by 27% from 26.4 mt in the first half of April.

CareEdge Ratings said that the dependence on domestic production is set to rise as prices surge amid geopolitical tensions. Higher domestic coal dispatches to the power sector were due to reduced coal imports, apart from an increase in overall demand for power generation with a resumption in economic activity.

Robust volumes are also boosting margins at CIL. According to a report, CIL's e-auction premium of 290% this March was at a record high compared to February with 120%, with volumes doubling sequentially to 7.9 mt. Analysts expect dispatches to remain at elevated levels and a pick-up in non-power off-take after plant inventory normalises.

Image Source

Also read: CIL offered 160.5 mt till Feb under e-auction of coal

Coal shortages and rising power demand amid an intense summer have increased prospects for Coal India Limited (CIL). With a strong demand driving prices for fossil fuel, domestic coal prices are also being supported by high international prices. Cheaper coal imports can help drive e-auction realisations. With CIL set to gain sales volume and realisation front, earnings expectations are improving, resulting in a sharp uptick in the stock price. Its sales volume at 662 million tonnes (mt) marked a 15% rise from FY21. Besides, its pit-head inventory at 57 mt in March is considered less because of the inadequate stock level at power plants. According to the analysts, CIL's overall volume outlook remains strong. It expects off-take to accelerate from seasonally strong demand and high import prices. Besides, increased production at Bharat Coking Coal Limited (BCCL) and profitable subsidiaries, including Mahanadi Coalfields Limited (MCL), South Eastern Coalfields Limited (SECL) and Northern Coalfields Limited (NCL), are likely to expand margins. CIL's supplies to the power sector have increased by 14.2% in the first half of April, from the same period last year to 1.64 mt. Its production increased by 27% from 26.4 mt in the first half of April. CareEdge Ratings said that the dependence on domestic production is set to rise as prices surge amid geopolitical tensions. Higher domestic coal dispatches to the power sector were due to reduced coal imports, apart from an increase in overall demand for power generation with a resumption in economic activity. Robust volumes are also boosting margins at CIL. According to a report, CIL's e-auction premium of 290% this March was at a record high compared to February with 120%, with volumes doubling sequentially to 7.9 mt. Analysts expect dispatches to remain at elevated levels and a pick-up in non-power off-take after plant inventory normalises. Image Source Also read: CIL offered 160.5 mt till Feb under e-auction of coal

Next Story
Infrastructure Urban

Global Rare Earth Supply Chains Diversify Away from China

In response to the rising global demand for rare earths critical for producing everything from electric vehicles to wind turbines, supply chains are undergoing a significant realignment away from China. Historically dominant in rare earth production, China's recent policies and geopolitical tensions have prompted Western nations and other stakeholders to seek alternative sources and bolster local capabilities. Rare earth processing involves two essential stages: initial extraction and subsequent refining into individual oxide compounds used to manufacture magnets essential in various industri..

Next Story
Infrastructure Urban

Coal India, US Firm to Explore Argentine Lithium

State-run Coal India Ltd is collaborating with a US company to explore lithium blocks in Argentina, a critical step in securing supplies of the essential battery material, according to an Indian source with direct knowledge of the matter. This initiative is part of India's participation in the US-led Minerals Security Partnership (MSP), which New Delhi joined last year to ensure a steady supply of minerals necessary to meet its zero-carbon objectives. As part of the MSP, India was invited to engage in 20-25 critical minerals projects, with four already identified by the Indian government. Indi..

Next Story
Infrastructure Energy

India's Coal Consumption Set to Surge Amid Hydroelectricity Shortfall

Amid a significant drop in hydroelectricity production caused by inadequate rainfall, India is gearing up to increase its coal consumption to satisfy rising power demands, according to S&P Global Commodity Insights. This shortfall in hydroelectric power is anticipated to perpetuate India's reliance on coal imports. During the fiscal year 2023-24, India's coal production approached the 1 billion metric ton milestone, reflecting the government's strategy to lessen dependency on imported coal. Nonetheless, the country has already imported approximately 85 million metric tons of thermal coal in 20..

Hi There!

"Now get regular updates from CW Magazine on WhatsApp!

Join the CW WhatsApp channel for the latest news, industry events, expert insights, and project updates from the construction and infrastructure industry.

Click the link below to join"

+91 81086 03000

Join us Telegram