Coal India Share Price

Fundamental analysis of Coal India Ltd.

Between 1973 and 1974, coal mines were nationalised to tackle the country's growing energy needs, especially during times when oil prices were on the rise. This was how Coal India Ltd. (CIL) was born, and since then, it has been achieving various milestones.

In FY24, CIL extracted 703.91 MT of tonnes and thus surpassed the FY23 record by a margin of 24 days! However, the government has also been increasing its focus on alternative energy sources such as solar. So, is this the end of Coal India’s growth trajectory, or has it got some tricks under its sleeve which can change the Coal India share price history?

Check out this article’s fundamental analysis of Coal India Ltd. along with updates on the Coal India share price to decide whether to invest in it!

Coal India Ltd.

Coal India Ltd. (CIL) is a state-owned coal mining corporation that was established back in November 1975 after its name change. Headquartered in Kolkata, this company is India’s largest coal producer. It has a total of 84 mining areas that are spread across eight states.

As of April 2020, this company reported to have about 352 mines, out of which 158 are located underground, 174 are opencast, and 20 are mixed mines.

CIL was also conferred the prestigious “Maharatna” company status by the government, which allows it to empower other selected organisations and help them become global giants.

CIL has a total of 7 subsidiaries that are responsible for producing about 87% coal in India and these are Bharat Coking Coal Limited (BCCL), Central Coalfields Limited (CCL), Eastern Coalfields Limited (ECL), Mahanadi Coalfields Limited (MCL), Northern Coalfields Limited (NCL), South Eastern Coalfields Limited (SECL), and Western Coalfields Limited (WCL).

Is investing in the coal sector worth It?

In recent years, the government has been promoting various renewable alternatives such as solar and wind, which might make investors sceptical about the coal industry. However, it is worth noting that in the Indian economy, 55% of the primary commercial energy is derived from coal.

There has been a staggering growth in the demand for electricity; hence, industries have been increasingly relying on thermal power sources such as coal to meet them. As per government reports, energy needs in the country have risen by 700% over the past four decades. Currently, about 75% of the thermal power is fueled by coal derivatives, which means there is still a significant demand for this sector.

Additionally, India is the second largest coal producer, with about 344.02 billion tonnes of coal reserves. This increasing demand has been met by consistently expanding the supply over the past two decades. According to the Ministry of Coal, coal production is said to cross 1 billion tonnes in the upcoming years.

With the demand for coal rising and CIL being at the forefront of meeting it, it might be worth investing in this sector.

Who are Coal India’s competitors in the mining and refinery sector?

Below is a list of a few of the competitors of Coal India Ltd.:

• National Mineral Development Corporation
• Kudremukh Iron Ore Company
• Gujarat Mineral Development Corporation
• Manganese Ore (India) Limited
• Orissa Minerals Development Company Limited
• Deccan Gold Mines

History of Coal India Ltd.

Let us check out the brief history of Coal India Ltd. and the recognition it has earned since its inception.

• Incorporation: Although CIL came into existence in November 1975, it was established as Coal Mines Authority Ltd. in 1973, following the nationalisation of the coal sector.
• Product range: Coal India Ltd produces various coal-based products such as coking coal, semi-coking coal, non-coking coal, beneficiated coal and tar.
• Infrastructure: Coal India Ltd. extensively focuses on infrastructure used for coal evacuation. The equipment used for coal evacuation is split into opencast mine technologies and underground mine technologies. CIL spent about Rs 19,840 crore on its capital to achieve state-of-the-art infrastructure arrangements in FY24.
• Certifications: CIL has received numerous certifications from the Bureau of India Standards (BIS). These include ISO 9001, 14001 and 50001 (Quality Management, Environment Management and Energy Management System).
• Awards and recognitions: In October 2020, CIL was felicitated by the Ministry for Health & Family Welfare, Science & Tech, Earth Sciences, Govt. of India because it was the first PSU to utilise its CSR funds towards the “Thalassemia Bal Seva Yojana” where it helped underprivileged children access bone marrow transplant.

With about five decades of experience under its belt, CIL is committed to fulfilling the country's energy requirements and emerging as a global player in the energy segment!

Company profile and Coal India share price forecast

Pros

• Debt-free: CIL’s debt profile is robust, implying that the company is financially stable and has a better cash flow. Instead of paying principal and interest, the company can focus on investments and capital instead of fulfilling the obligations.
• Good dividend rate: Coal India Ltd. offers one of the highest dividend yields, with the current rate being 4.98% at a share price of 512.35.
• Good return on equity (ROE): CIL has a stable record of providing 83.3% over the past three years.
• Growth in share price: In the previous year, Coal India share price has grown more than 100%, which can also be analysed from the Coal India share price chart. Additionally, the Coal India share price target is Rs 577 by the end of the year.

Cons

• Political risks: Since Coal India Ltd. is strategically important for the government of India, it is subjected to an extensive range of regulations and laws that are subject to the country's political dynamics.
• Infrastructure bottlenecks: Due to law and order issues, the company sometimes faces evacuation infrastructure issues that disrupt the operations.
• High P/E ratio: Coal India share price today is said to be overvalued because it has a P/E ratio of 20.03.

The finances

The table below summarises some of the critical financial data of Coal India Ltd. as of June 2024.

Metric	Value
Market cap	Rs 2,95,000+ Cr.
Market price	Rs 500 around
Book value	Rs 28.11 (Per share)
Dividend yield	4.95%
ROCE	91.31%
ROE	89.54%
Face value	Rs. 10

Shareholding pattern of Coal India Ltd.

The shareholding pattern of this public sector company has been listed below, taken as of June 2024:

• Promoters: Hold 63.13%.
• Foreign Institutional Investors (FII): 8.41%
• Domestic Institutional Investors (DII): 23.3%
• Public: 5.16%

Peer multiple comparison

To better understand the performance of Coal India Ltd., let us compare it against its peers. The table below briefly compares Coal India Ltd. and its peers with data taken as of June 2024.

Metric	Coal India Ltd.	National Mineral Development Corporation (NMDC)	Gujarat Mineral Development Corporation (GMDC)	Manganese Ore (India) Limited (MOIL)
P/E ratio	20.03	13.94	21.03	36.44
P/B ratio	18.22	3.09	2.13	4.36
Dividend yield (% of share price)	4.98%	2.15%	2.35	1.15%