Coal India Q1 Preview: Q1FY24 could see a 31% YoY net profit drop and a 2% revenue decline

Coal India Q1 Preview: Q1FY24 could see a 31% YoY net profit drop and a 2% revenue decline

Coal India, the largest coal supplier in India, is projected to report a 31% year-on-year (YoY) decline in its net profit for the first quarter of fiscal year 2023-2024 (Q1FY24). This prediction is based on the average of standalone estimates provided by several financial services firms, including Motilal Oswal Financial Services Limited, Kotak Institutional Equities, Axis Securities, and Elara Capital.

The anticipated net profit for Q1FY24 is expected to be around Rs 6,125 crore, down from the Rs 8,834 crore reported in the same quarter of the previous fiscal year (Q1FY23). This substantial decline in net profit reflects the challenges and fluctuations that the company might be facing in the coal industry, which can be influenced by factors such as market demand, production volumes, and pricing dynamics.

On a sequential basis, the net profit is projected to increase by 10.79% quarter-on-quarter (QoQ) compared to the previous quarter. The expected net profit for Q1FY24, which is around Rs 6,125 crore, represents a positive shift from the Rs 5,528 crore reported in the preceding quarter (Q4FY23).

The variations in net profit from quarter to quarter and year to year can be attributed to a range of factors that impact Coal India’s operations and financial performance, including changes in coal demand, supply, market conditions, and production costs.

In conclusion, the projected decline in net profit for Q1FY24 for Coal India underscores the potential challenges and market dynamics affecting the coal industry. While the company is expected to see a sequential increase in net profit, these fluctuations in financial performance reflect the complex nature of the coal sector and its sensitivity to various external and internal factors.

According to the mean consensus of the mentioned brokerage firms, Coal India’s financial performance for the first quarter of fiscal year 2023-2024 (Q1FY24) is anticipated to exhibit the following trends:

1. Revenue: The projected revenue for Q1FY24 is estimated to be Rs 34,501 crore. This would represent a 1.68% decrease year-on-year (YoY) compared to the revenue of Rs 35,902 crore reported in the same quarter of the previous fiscal year (Q1FY23). Sequentially, the projected revenue for Q1FY24 is expected to decrease by 9.56% from Rs 38,152 crore reported in the fourth quarter of the previous fiscal year (Q4FY23).

2. EBITDA Margin: The mean EBITDA (earnings before interest, taxes, depreciation, and amortization) margin for Q1FY24 is expected to be 23.8%. This projection reflects a decline of 570 basis points compared to the EBITDA margin of 29.7% reported in Q1FY23. In a sequential comparison, the EBITDA margins are anticipated to increase by 1270 basis points from 11.1% reported in Q4FY23.

These projections provide insights into the expected financial performance of Coal India during Q1FY24. The anticipated changes in revenue and EBITDA margin highlight the company’s response to evolving market conditions, demand fluctuations, production costs, and other factors influencing its financial results. The variations between YoY and sequential comparisons underscore the dynamic nature of the coal industry and the company’s ability to adapt to changing circumstances.

Coal India Limited, as a state-owned ‘Maharatna’ company, holds a prominent position within the coal mining and production sector in India. Here are key details about the company:

– Operations and Mines: Coal India Limited operates a network of 636 coal mines located throughout India. These mines extract coal to meet the energy demands of various sectors, such as power generation, steel production, cement manufacturing, and other industrial activities.

– Supply Contribution: The company plays a crucial role in addressing India’s energy requirements, contributing to more than 80% of the total coal production annually. This highlights its significance in fueling the nation’s economy and ensuring a reliable energy supply.

– Ownership: As a state-owned enterprise, Coal India Limited operates under the purview of the Indian government. It is categorized as a ‘Maharatna’ company, a designation reserved for select public sector enterprises that exhibit significant size and operational excellence.

– Industry Impact: Given the widespread use of coal as a primary energy source in India, Coal India Limited’s operations have a far-reaching impact on various sectors of the economy. Its coal supplies are integral to power generation, industrial processes, and infrastructure development.

– Coal Diversity: Coal India Limited extracts a range of coal varieties, including thermal coal and coking coal. Thermal coal is primarily used for power generation, while coking coal is a vital component in steel production.

– Economic Contribution: The company’s activities contribute not only to energy supply but also to job creation and economic growth in regions where its mines are located. The employment generated by the coal mining industry extends to mining communities and their associated economies.

– Environmental Considerations: Coal mining and its associated activities can have environmental implications. As concerns about climate change and environmental sustainability grow, Coal India Limited’s operations may also be subject to regulatory and public scrutiny in terms of their environmental impact and mitigation efforts.

In summary, Coal India Limited’s extensive network of coal mines and its role as a major coal producer make it a critical player in supporting India’s energy requirements and driving economic activities across various sectors. Its operations are closely tied to India’s development goals, energy security, and economic prosperity.