Coal India share price scales 52-week high on improved volumes and blended realization outlook

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Coal India share price (CIL) has gained more than 36% since end August and has scaled fresh 52-week high on Tuesday. The company remains in the spotlight on rising production and supplies while higher international coal prices also mean that the company’s realisations open market supplies to non-power sector will also improve. High dividend yield remains another key factor for higher investor interest in Coal India.

Coal India on Monday post market hours had announced that its supplies to thermal power plants of the country shot up close to 6% to 23.5 million tonnes (mt) during the first fortnight of October 2023 ahead of the festive season. Comparatively the supplies were 22.2 MTs in the same period of October 2022. Also Read-HDFC Bank share price rises 2% after Q2 results; should you buy, sell or hold The strong power demand is leading to higher demand from the power sector.

The Coal India’s first half FY24 production at 333 MT already had risen 11.3% year-on-year while total supplies at 360.7 mt during first half, were up 8.6% y-o-y growth. The analysts say Coal India's growth is commendable looking at the high base. While the September quarter still remains a seasonally weak quarter, where demand supplies get impacted by rainfall, the supplies are picking up pace in October.

Coal India's volume target for FY24 stands at 780 mt, while it plans to achieve 840 mt and 1,000 mt during FY25 and FY26 respectively. The power sector demand will remain strong for thermal coal as contribution from hydropower and renewable also start declining post Q2. As strong power sector demand lifts Coal India's volume prospects, with rising production higher supplies to non power sectros will further accrue positives.