Coal India Limited (CIL), which accounts for over 80% of domestic coal output, reported better-than-expected Q2 results, thanks to higher-than-expected coal prices and lower-than-expected employee costs. The company reported a 12.5% increase in consolidated net profit for the quarter ended September 30, 2023, compared to the previous year, whereas, net profit fell by 14% QoQ. CIL's board has declared its first interim dividend for the financial year 2023–24 at Rs. 15.25 per share. The company's volume growth trajectory has improved and is likely to sustain itself amid India's rising power demand, while the impact of wage hikes and e-auction price falls has already come. The PSU recorded a 12 percent on-year surge in volume, which helped offset the impact of lower e-auction prices and higher staff costs. Raw coal production reached 157.426 million tonnes during the quarter, and off-take of raw coal was 173.731 million metric tons.
The profit was primarily driven by higher sales and larger profit contributions from CIL's joint ventures (JV). The JV profits turned positive at Rs 89.75 crore from a negative Rs 140.75 crore last year. Revenue from operations increased by nearly 4% to Rs 3,277 crore, while consolidated sales increased to Rs 29,978.01 crore in the July–September period from Rs 27,538.59 crore in the previous fiscal. Total expenses in the second quarter increased by 9 percent to Rs 26,000.05 crore, mainly due to higher wage expenses.
EBITDA rose by 12 percent to Rs 10,121 crore in the second quarter of this fiscal, over Rs 9,040 crore in the year-ago period. The EBITDA margin stood at 29.1% in the reporting quarter, compared to 28.6% in the corresponding period in the previous fiscal. India's strong economic growth outlook and rising power consumption have triggered a higher demand for coal, which should fuel healthy growth for Coal India in the coming years. The miner delivered a strong FY23 with the EPS rising 63% year-on-year to Rs 46, boosted by a sharp spike in e-auction realisation amid rising global coal prices.
The company has a long dividend track record. Since 2013, the dividend has grown its distributions at 9.0% per annum. The dividend looks likely to grow, as Coal India has grown EPS at 27% per year over the past five years.
The stock at time of reporting was trading 4% up at Rs. 346.