Coal India Stock Analysis: 6.78% Dividend Yield and 63.6% ROCE

Coal India Ltd. – Complete Financial Analysis Report

Coal India Ltd.

Value Pick : Best share to buy today

Key Market Metrics

Market Cap

₹2,31,842 Cr

Current Price

₹376

Dividend Yield

6.78%

P/E Ratio

6.43

ROCE

63.6%

ROE

52.0%

Book Value

₹156/share

Promoter Holding

63.1%

Financial Performance

H1 FY 2024-25 Highlights

  • Net Sales: ₹60,441.43 Cr (YoY: ↓ 4.1%)
  • PAT: ₹17,218.35 Cr (YoY: ↓ 7.2%)
  • Average Realization Per Ton: ₹1,622.28 (YoY: ↓ 5.8%)
  • Raw Coal Production: 341.35 MT (YoY: ↑ 2.5%)

Dividend Policy

Coal India maintains a strong dividend payout policy, supported by:

  • Current yield: 6.78%
  • Low debt: ₹7,816 Cr
  • Substantial reserves: ₹90,034 Cr

Growth Drivers & Expansion Plans

Production Capacity

H1 FY 2024-25 production increased by 2.5% YoY to 341.35 MT, with targeted 5-7% YoY growth for FY 2025.

E-Auction Performance

  • Volume growth: 19.9% YoY to 38.28 MT
  • Current realization: ₹2,434 per ton
  • Previous year: ₹3,294 per ton

Renewable Energy Initiatives

Targeting 3 GW of solar capacity by FY 2028, supporting India’s energy transition goals.

Capital Expenditure

H1 FY 2024-25 Capex: ₹6,800 Cr

Strategic Focus Areas:

  • Mechanized Mining Enhancement
  • Rail Infrastructure Development
  • Logistics Optimization

Competitive Landscape

Market dominance with over 80% of India’s coal production, facing evolving challenges:

  • Commercial Mining Reforms
  • Import Competition
  • Renewable Energy Transition

Risk Assessment

Regulatory Risks

  • Renewable energy policy shifts
  • Environmental compliance costs

Operational Risks

  • Project execution delays
  • Transportation inefficiencies

Market Risks

  • Demand-supply volatility
  • Global economic impacts

Valuation & Investment Thesis

Valuation Metrics

  • Current P/E: 6.43
  • Fair Value Range: ₹450-480

Investment Merits

  • High dividend yield with strong ROCE
  • Strategic growth initiatives
  • Dominant market position

Conclusion

Coal India Ltd. presents a compelling investment opportunity, combining steady income through high dividends with operational excellence. While facing industry transitions and regulatory challenges, the company’s market position and strategic initiatives provide resilience.

Disclaimer: This report is for informational purposes only and does not constitute investment advice. Investors should conduct their own research or consult a qualified financial advisor before making any investment decisions. Neither the author nor Bruyne Labs assumes responsibility for investment outcomes.

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