Coal India planning to raise supplies by a minimum of 15 MT

Power plants sighs relief as Coal India to increase supply by 15 MT

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Coal India is reportedly planning to raise supplies by at least 15 million tonnes (MT) annually in the weeks to come, as the company has almost completed three new rail projects linked to high-capacity mines. The new rail links will benefit mines belonging to Coal India subsidiaries Central Coalfields, Mahanadi Coalfields and South Eastern Coalfields.

Why is this important

The additional supply will be enough to fuel almost 4,000 MW of power plants through the year, which will rise as more coal is transported, the executives said. The increased availability comes as demand for power rises with temperatures climbing in the summer.

How this is going to impact stocks

Coal India produced 567 mt coal in FY18. As per Annual Plan proposal for 2018-19, the production target of Coal India has been kept at 630 MT (million tonnes). Additional 15 MT supply would take the target of Coal India to 645 MT which would imply 20% growth in production in FY19 over FY18 production. Power plants are likely to get benefited from increased supply as power plants suffered in previous quarter to low availability of coal from Coal India.

Coal India is trading at 278.45 (+3%) with a market capitalisation of Rs. 1,72,659 crore at PE 20.45x FY18A.

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