Coal news and updates

Coal auction a mixed bag for power companies

Shares of companies related to coal block auction have witnessed a mixed reaction based on company's bid price. Jindal Steel and Power has surged nearly 30% in the past one week as analysts see the company to be a key beneficiary of resolution to raw material issues while the management is looking for de-leveraging its balance sheet. On the other hand, CESC has crashed about 13% as market participants are concerned about the company's aggressive bid policy though the company sees no material risk to profits.

Analysts said participants at the e-auction of coal blocks for both regulated and unregulated sectors have faced difficult choices as the outcome will redefine their cost structures and profitability in the short term even as they ensure fuel security and sourcing flexibility over the long term. Operating margins, however, will be impacted if the final price paid is too high. And for companies that fail to win back coal blocks, profitability will be dented.

source: http://economictimes.indiatimes.com