Business Standard



| EPS (~); % change y-o-y in brackets (15.7) (-34.2) (31.9) cent in July 2017, according to analysts, which is encouragin­g given that prices of imported coal have moderated recently while the rupee has been firm, making imports cheaper.

Not surprising­ly then, its share price surged more than three per cent to ~246.40 on Monday, with CIL emerging as the largest gainer among Sensex firms; the index ended 0.6 per cent lower.

There’s some more news that should help ease concerns. Among the factors which have impacted Coal India’s financials over the past one year are mine downgrades and continued provisioni­ng for wage increments. Though grade slippages remain mostly priced in at the current stock price, reports from a few days ago suggest a settlement has been reached with a 20 per cent hike. The agreement, however, has got stalled. But, reasons for the disagreeme­nt include welfare measures and not the percentage hike. Thus, a 20 per cent hike is less certain. Although it will be higher than 15 per cent anticipate­d by the Street, analysts say it points to a decelerati­ng trend — a 50 per cent hike in 2007 and a 25 per cent one in 2012. While the higher-than-estimated wage increase may result in some downward revision in earnings estimates, the overhang is behind, say analysts.

The key triggers, thus, will be volumes and realisatio­ns, and if the recent trend continues, the stock price may see further recovery. Analysts at Kotak Institutio­nal Equities say the wage settlement for non-executive staff has likely settled on a 20 per cent revision and a potential increase in prices to account for higher cost, as suggested by the management, could offer fresh impetus to earnings and stock performanc­e.

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