IPO-bound Bharat Coking Coal pins growth on demand from steel sector, but over reliance on power producers to remain

Mumbai: Public markets-bound Bharat Coking Coal Ltd (BCCL), the largest producer of coking coal in India, is pinning its growth story on rising demand from the steel sector, for which the commodity is a key input, the company's management said on Monday.Coking coal is used to make coke, a key input for steel production. This coal sells at a premium to thermal coal, which is burned for heat in power plants and other industries."The real value of coking coal is not getting reflected properly in the Coal India valuation.

Now, when anybody will purchase the Bharat Coking Coal shares, will become a direct beneficiary of India's steel growth story," Manoj Kumar Agarwal, chairman and managing director of BCCL, said in an interview on Monday.However, the coking coal mined in India tends to be of significantly poor quality compared to the requirements of steelmakers and what is available in the international market. As a result, most of the coal produced by BCCL ends up with power-producing companies, which use it as a heating material, just like thermal coal, and pay a slight premium for it.BCCL mined 40.5 million tonnes (mt) of coal in FY25, including small quantities of thermal coal.

It expects production to grow to 54 mt by FY30, after a dip is expected in the ongoing fiscal year on account of heavy rains."The growth from 40 million to 54 million tonnes will come from the steel sector. Steel sector realization is more, so the enhanced growth will directly give benefit to the shareholder in terms of higher realization and an increase in the Ebitda," said Mukesh Agrawal, director (finance) at Coal India Ltd.In FY25, three-fourths of the company's revenues came from the power sector, as per its red herring prospectus.