PSU stock Coal India declines 4.5%, trades near 52-week low as February production falls marginally

Shares of state-owned Coal India fell nearly 4 percent in intra-day trading on Monday, March 3, trading close to their 52-week low. The decline came after the company reported a slight 0.9 percent drop in coal production for February compared to the same period last year. The dip in output raised concerns among investors despite the company’s overall production growth for the fiscal year.

Coal Production and Dispatch Trends

Coal India’s production for February stood at 74.1 million tonnes (MT), down from 74.8 MT in February 2024. However, on a cumulative basis, the company reported a year-on-year production increase for the April-February period of FY25, with total output rising to 695.3 MT from 685.1 MT in the previous year.

The company’s production accounts for over 80 percent of India’s total coal output, which grew 5.73 percent year-on-year to 928.95 MT during April-February. Similarly, coal dispatches during the period reached 929.41 MT, up 5.5 percent from 880.92 MT in the previous year.

The Ministry of Coal highlighted that these numbers reflect India’s commitment to energy security and industrial growth. It also emphasized that the government’s focus on infrastructure development and operational efficiency should sustain this positive momentum in the coming months.

Waiver for Non-Power Sector Consumers

In a bid to boost offtake, Coal India has also introduced a waiver on financial coverage requirements for its non-power sector (NPS) consumers. Previously, these consumers had to provide financial coverage equivalent to ten days’ worth of coal value for supplies received via rail transport.

“The latest decision is one more step in CIL’s ongoing efforts to streamline operations under the broader ease of doing business initiative. This also helps reducing financial burden for NRS consumers and improve their cash liquidity” said the firm.

Coal India stated that this decision aims to simplify transactions and improve business efficiency. The waiver is expected to ease financial burdens on NPS consumers, enhance liquidity, and allow them to allocate freed-up capital for other operational needs. A company executive noted that the move aligns with broader efforts to streamline operations under the government’s ease-of-doing-business initiative.

“This initiative is also part of CIL’s broader vision to optimise and modernise coal supply processes for all sectors, aligning with the government’s ongoing push to make business operations more transparent, accessible, and cost-effective for industries across India,” the company said in the stock exchange filing.

During the ongoing financial year, Coal India supplied approximately 560 MT of coal to the power sector and nearly 134 MT to NPS consumers until February. Offtake via rail transport accounted for 55 percent of the company’s total supplies. The miner reiterated that the initiative is part of its broader vision to modernize coal supply processes and enhance transparency in business operations.

Stock Price Performance

Coal India’s stock declined as much as 4.5 percent to an intra-day low of ₹352.35. The stock is currently over 35 percent below its 52-week high of ₹544.70, recorded in August 2024, and less than 1 percent away from its 52-week low of ₹349.20, hit last month.

Over the past year, the PSU stock has lost more than 17 percent. In February alone, it shed nearly 7 percent after posting a modest 3 percent gain in January.

Overall, Coal India’s marginal drop in February output weighed on investor sentiment despite its overall production growth for the fiscal year. The company’s recent move to ease financial coverage for NPS consumers reflects its efforts to improve business conditions and streamline coal supply processes. However, with the stock trading near its yearly lows, investors will closely watch further production trends and policy developments in the sector.

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