Coal news and updates

Why Coal India Shares Are Up Despite Profit Miss in Q4

Shares in India's largest coal producer, Coal India jumped as much as 2.7 per cent to an intraday high of Rs 393.75 on Friday. Coal India shares jumped, despite the company reported lower than estimated earnings post market hours on Thursday.
 

The company reported a consolidated net profit of Rs 4,238 crore, down 4 per cent year-on-year against analyst's estimates of Rs 4,662 crore (NDTV analyst's poll). However, its revenue of Rs 20,774 crore was above the Street estimate of Rs 20,571 crore. It was up 4 per cent annually.
 

Analysts say although Coal India's profit was lower than estimates but operationally it was a good quarter.
 

Coal India's profit was affected due to higher contractual costs and employee costs, which increased 31 per cent and 13 per cent respectively. Depreciation and amortisation expenses, which are non-cash (no actual cash outflow) in nature, increased 20 per cent to Rs 698 crore.
 

However, total coal production of the company increased 15 per cent year-on-year to 152 million tonnes in the March quarter against analysts' estimates of 145 million tonnes.
 

Also, coal sold through e-auction increased annually in the March quarter. Analysts say coal sold through e-auction gives higher profit margin to Coal India than coal sold through fuel supply agreement (FSA).

Independent market analyst Ambareesh Baliga, told NDTV that "going ahead with the e-auction, things will be falling in place for Coal India and with power generation expected to move up the demand for coal should grow." (Watch)
 

Mr Baliga says, any sort of deep in the stock is a buying opportunity. "I don't see Coal India coming below levels of Rs 363-Rs365," he added.

The standalone performance of Coal India was also very encouraging. On a standalone basis, the company's net profit during January-March quarter increased almost 15 times to Rs 9,629 crore from Rs 646 crore year on year on the back of other income.
 

"The major income... of Coal India (standalone) is dividend received from subsidiaries. Dividend from subsidiaries during the quarter ended March 31, 2015 was Rs 9,480.88 crore," the company said.
 

Coal India shares closed 2.14 per cent higher at Rs 391.30 apiece, compared to 1.17 per cent gains in the broader Sensex.

source: http://profit.ndtv.com