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NLC India Announces ₹12,000 Crore Coal Mine Investment, Shares Soar to Record High.

NLC India Announces ₹12,000 Crore Coal Mine Investment, Shares Soar to Record High.

NLC India celebrated a milestone today as it officially acquired a significant coal mine in Odisha, which could potentially double its lignite-cum-coal production. The company formalized its acquisition by signing a Coal Mine Development and Production Agreement with the Ministry of Coal, taking over the Machhakata coal mine in the Angul district. NLC India plans to invest approximately ₹12,000 crore in developing the mine, which it secured under a 'revenue sharing' model. Production is expected to commence by 2030.

NLC India won the Machhakata coal mine in the recent 8th round of auctions conducted by the ministry. The acquisition is significant for the company as the mine could produce 30 million tonnes of coal annually, compared to last year's total coal and lignite production of 36.32 million tonnes.

The stock market reacted positively to the news, with NLC India's share price reaching ₹302.60 before closing at an all-time high of ₹297.75, trading at 21 times its earnings and 2.42 times its book value.

Originally a thermal power generator with captive lignite mines, NLC India has evolved into a significant producer of both coal and lignite. In the 2023-24 fiscal year, the company reported revenues of ₹8,363 crore from power sales and ₹7,902 crore from mining, with mining yielding higher profits—₹1,550 crore (56% of total net profit), compared to ₹907 crore from power. Net profit from mining operations accounted for 19.61% of sales, while electricity contributed 10.8%.

NLC India's revenues from coal sales are expected to rise. Chairman and Managing Director Prasanna Kumar Motupalli revealed that coal production from the Talabira mines would increase to 16 million tonnes this year, up from 12.64 million tonnes in 2023-24. Additionally, NLC India acquired the North Dhadu coal mine last year, which can produce 4-5 million tonnes of coal annually. Motupalli stated that the company plans to sell the entire output from the mine on the open market, rather than through long-term supply agreements.

Furthermore, NLC India's joint venture with Uttar Pradesh Rajya Vidyut Utpadan Nigam, in which it holds a 51% stake, has been allotted the Pachwara South coal block in Jharkhand. The mine can produce 9-10 million tonnes of coal annually, but the joint venture’s 1,980 MW Ghatampur thermal power plant, set to commence operations shortly, will require only about 5 million tonnes of coal. The excess production will be sold in the market.

Looking ahead, NLC India's corporate plan for 2030 targets coal and lignite production of 100 million tonnes.