Coal In­dia out­put growth slips in Fe­bru­ary

The Pak Banker - - 6BUSINESS -

MUM­BAI: In­vestors gave a thumbs down to Coal In­dia Ltd's (CIL's) lat­est pro­duc­tion and sales (by vol­ume) num­bers. Pro­duc­tion in­creased 6.3% year-on-year for Fe­bru­ary while sales grew at an even slower pace of 5.5%. See the chart along­side. Weak power sec­tor de­mand con­tin­ues to haunt sales growth and last month seems to be no ex­cep­tion. All In­dia coal stock at power plants as per Cen­tral Elec­tric­ity Au­thor­ity's Fe­bru­ary re­port is 24 days versu s a nor­ma­tive re­quire­ment of 21 days, pointed out a re­port by JM Fi­nan­cial In­sti­tu­tional Se­cu­ri­ties Ltd. In com­par­i­son, coal stocks at power plants were 9-10 days last year.

Fe­bru­ary num­bers were an­nounced on Tues­day af­ter mar­ket hours. On Wed­nes­day, the CIL stock de­clined about 2%, on a day when the bench­mark Sen­sex in­creased 2%.

Nev­er­the­less, per­for­mance for the year so far is noth­ing to com­plain about. Pro­duc­tion and off­take growth be­tween AprilFe­bru­ary was 9.2% and 9.3%, re­spec­tively, rep­re­sent­ing 97% of the tar­geted level for each. Achiev­ing the full-year tar­get looks dif­fi­cult. The im­plied pro­duc­tion/off­take year-on-year growth in March is 27%/41%, for the com­pany to achieve its fis­cal year 2016 tar­gets. That's a tall or­der.

CIL shares showed a mod­est gain af­ter it an­nounced bet­terthan-ex­pected De­cem­ber quar­ter re­sults. De­mand con­cerns and muted out­look on re­al­iza­tions con­tinue to weigh on the stock. There is hope that power sec­tor de­mand could im­prove dur­ing the sum­mer sea­son and thus lead to bet­ter off­take in the near fu­ture. That re­mains to be seen. De­mand from non-power sec­tor (es­pe­cially the ce­ment in­dus­try) though, isn't par­tic­u­larly bright and the sit­u­a­tion may per­sist for some time.

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