PSU stock falls 6% after company’s net profit decreases by 43% QoQ
PSU stock falls 6% after company’s net profit decreases by 43% QoQ
India’s largest state-owned PSU mining corporation and chief coal producer experienced a sharp 6% decline in its stock price. The mining giant’s shares dropped significantly after releasing its second-quarter results for FY25, missing market expectations.
Stock Movements
Coal India ltd has a market capitalisation of Rs. 2,73,000 Crores. Its shares were trading at Rs. 442.40 on 28th october 2024, and it was down 6 percent by the during the day. Previous close was at 461.10 and reached a high of 458.00.
The market capitalisation of the company witnessed a notable decline following the results. Meanwhile, trading volumes increased substantially as investors reassessed their positions..
Q2 Results Overview
Coal India reported a consolidated net profit of Rs 6,289 crore in Q2FY25. Consequently, this represents a 22% decline from Rs 8,049 crore in the same period last year.
Moreover, the revenue from operations stood at Rs 30,673 crore in Q2FY25. This shows a 6.4% decrease compared to Rs 32,776 crore in the corresponding quarter.
The operating performance revealed significant challenges, with EBITDA declining 14.2% to Rs 8,617 crore. Meanwhile, the EBITDA margin contracted to 28.1% from the previous year’s 30.6%.
On a sequential basis, the performance showed concerning trends. The profit after tax dropped 43% compared to Q1FY25’s Rs 10,959 crore.
Additionally, the revenue decreased by 16% from the previous quarter’s figure of Rs 36,465 crore. This decline has raised questions about the company’s growth trajectory.
Notably, the board declared an interim dividend of Rs 15.75 per equity share. The company set November 5, 2024, as the record date for dividend distribution.
The date of payment for this first interim dividend is scheduled for November 24, 2024. This announcement provides some relief to shareholders amid declining financial metrics.
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About the Company
Coal India maintains its position as India’s primary coal producer. Currently, the company accounts for over 80% of the country’s domestic coal output.
In FY24, the company achieved a 10% increase in coal production, reaching 773.6 million tonnes. However, this fell slightly short of its 780 MT target for the fiscal year.
The company faces unique challenges in the solar sector due to procurement restrictions. Central Public Sector Enterprises cannot source cheaper solar PV technologies from neighboring countries.
Despite these operational challenges, Coal India continues its vital role in India’s energy sector. The company remains focused on maintaining its market leadership in coal production.
Looking ahead, the company faces the dual challenge of maintaining production growth while managing cost pressures. Nevertheless, its dominant market position provides a strong foundation for future operations.
The management continues to focus on operational efficiency and strategic initiatives. These efforts aim to strengthen the company’s market position despite current headwinds.
Written By Fazal Ul Vahab C H
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