CIL under pressure, as global coal prices falls

Coal India, the country's largest coal-producing company, has been under stress due to falling global coal prices. This has led analysts to revise their forward earnings estimates, with the company reporting lower net profit and adjusted Ebitda in Q4.

The falling prices have also put pressure on e-auction prices, with premiums earned by Coal India declining. However, the company has seen growth in production and sales volumes, which could help offset the decline in e-auction prices. Despite this, the stock closed 1.83% lower on Monday, underperforming broader indices that were up over 1% in two trading sessions.

India's annual coal production fell for the first time since 1998/99 due to heavy rainfall and a slowdown in demand. This led to a reduction in the country's annual electricity generation from coal-fired utilities, which also decreased for the first time in 2019. 

The Prime Minister's aim to cut thermal coal imports to zero has been hindered by the slow pace of reforms and Coal India's inability to ramp up production quickly. The country imported nearly 200 million tonnes of fuel last year.

While coal prices have been retreating from their highs in 2022, they remain well above the 2017-2021 average. Global coal consumption levels have decreased in recent years, with many countries seeking to reduce their dependence on fossil fuels.