Two years after listing, Coal India stock fails to excite investors

Coal India Limited, the world's largest coal miner, listed on the stock exchanges on November 4, 2010. Those who received the stock at the IPO allotment price of Rs 245 apiece - retail investors got a five per cent discount - made handsome gains in the initial months as the stock went past the Rs 400 mark to peak at Rs 422 on the National Stock Exchange (NSE) on May 31, 2011.

Since then, however, the stock has been losing its sheen. Those who picked the scrip at prices above Rs 300 hoping it would continue its upward journey - like the demand for coal - may be ruing not exiting during its highs. As the markets opened on Monday, January 28, the Coal India stock was trading at around Rs 338 - declining further from previous weeks. Meanwhile, the Nifty, the NSE's benchmark index, had breached the 6,000-mark, and the Sensex, the Bombay Stock Exchange's benchmark index, had climbed to 20,135 points.



The Kolkata-headquartered company, 10 per cent of which was divested by the United Progress Alliance regime, fetched the government about Rs 15,000 crore two years ago. In terms of price appreciation, the stock may not have delivered great returns to everyone, but it has been consistent with dividend payouts.

According to Bhavesh Chauhan, senior research analyst at Angel Broking, there has not been a positive push for the stock to move ahead. "A five per cent growth in production volumes would not excite the stock."

The public sector behemoth has finalised its targets for 2013/14 at 492 million tonnes, upping volumes six per cent from the current year's (2012/13) target of 464 million tonnes. The company missed the target last year and may miss it this year too.

Coal India Ltd has always been in the spotlight, with the government and power generating companies, both public and private, constantly turning the heat on the company to step up production and supply at cheaper rates. From about 78 million tonnes at the time of its formulation, it reached a level of about 436 million tonnes in 2011/12, and is aiming to produce 615 million tonnes in 2016/17.

As against an actual growth of 3.8 per cent achieved in the 11th Plan (2007-12), Coal India is targeting an ambitious seven per cent growth during the ongoing 12th Plan (2012-17).

Coal supplies have been falling short in recent times due to domestic production capacity constraints. The government is taking measures to address these issues, said Coal Minister Sriprakash Jaiswal, addressing the seventh International Exhibition & Conference on the Power Sector, in New Delhi, on January 16.

According to official statistics, about 55 per cent of primary energy supply and about 70 per cent of power generation in India is coal based. At the current level of coal production of about 540 million tonnes - from Coal India and outside - India's coal reserves are likely to last for over 100 years.