Coal India share price rises more than 5% on higher dividend yield expectations, strong earnings prospects

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Coal India Ltd shares with gains of more than 5% on the exchanges, scaled fresh 52-week highs on Tuesday. Notably it was the largest gainer amongst the Nifty 50 stocks. As improved earnings prospects have lifted investor confidence, high dividend expectations are further adding to the investor sentiments.

The stock that had been rebounding after seeing 52-week lows in March, however, has seen momentum catch pace since September. On the operational front, the production volumes have remained strong with the company having reported healthy sales volume growth during the first half of FY24. Coal India’s first half FY24 production at 333 MT rose 11.3% year-on-year while total supplies also surged to 360.7 MTs during first half, marking 8.6% y-o-y growth.

The rising power demand in the company has been keeping its volume prospects firm. Also Read - Coal India production rises 12.6% YoY to 51.4 MT in September The higher production volumes also mean that after meeting power sector demand where its supplies coal under Fuel Supply agreements at pre decided prices the company can also supply higher volumes to the non-power sector where it fetches higher prices for its produce. Strong demand is also leading to a significant rise in e-auction premiums.

With the monsoon receding and hydropower and wind generation falling, demand for thermal power is set to rise further in the second half FY24 said analysts. Also read -Coal supply ahead of projections: Coal India The rise in global coal prices coupled with an uptick in industrial activity pushed up the e-auction premium to 106% in September-23 from 54% in June-2023, said analysts at Nuvama Institutional Equities. Prices of thermal coal in the international market have been gradually