Coal India (CIL) recently announced its Q4 results for FY25, leading to increased investor attention on the stock. The central question is whether to buy, sell, or hold Coal India shares based on this performance.

Q4 Results Overview

Coal India's Q4 FY25 results showed a mixed performance. The company's consolidated net profit witnessed a year-on-year (YoY) increase of 12.04%, reaching ₹9,604.02 crore, surpassing estimates. However, revenue from operations saw a slight dip of 1.02% YoY, amounting to ₹37,824.54 crore. Earnings before interest, tax, depreciation, and amortization (EBITDA) stood at ₹11,790 crore. The company's board has recommended a final dividend of ₹5.15 per share for FY25.

Key Highlights from the Results

• Profit: Consolidated net profit increased by 12.04% YoY, beating estimates.
• Revenue: Revenue from operations decreased marginally by 1.02% YoY.
• EBITDA: EBITDA increased by 3.5% YoY to ₹11,790 crore.
• Dividend: A final dividend of ₹5.15 per share was declared for FY25.
• Production: Raw coal production during the quarter saw a minor decline of 1.7% YoY, with a total of 237.69 million tonnes.
• Offtake: The company recorded a total coal offtake of 201.38 million tonnes in Q4 FY25, showing a slight decrease compared to the previous year.

Analyst Perspectives

Analysts' estimates prior to the results anticipated a subdued performance due to pressure on realizations, despite higher production volumes. SMC Global Securities noted that net profit was projected to decline YoY due to weaker EBITDA and elevated employee costs. Motilal Oswal Financial Services (MOFSL) had estimated flat YoY net profit growth but expected revenue to rise, driven by better e-auction volume and premium.

Factors Influencing Coal India's Performance

Several factors have influenced Coal India's performance in the reported quarter:

• E-auction premiums: While a quarter-on-quarter decline in e-auction premiums was expected, some YoY improvement in both pricing and volumes was noted.
• Employee costs: Elevated employee costs have been a significant factor impacting profitability.
• Production and offtake: While full-year production saw a slight increase, the Q4 production witnessed a decline.

Dividend Announcement

Along with the Q4 results, Coal India's board recommended a final dividend of ₹5.15 per share. The company has a history of rewarding investors with dividends, having announced a dividend of ₹26.35 per share in the last 12 months.

Future Outlook and Growth Strategy

Coal India is strategically preparing for the future by:

• Diversification: Venturing into solar power projects and exploring coal gasification and coal bed methane extraction.
• Production Increase: Aiming to achieve 1 billion tonnes of annual production.
• Technological Upgrades: Implementing drone surveys, GPS-based truck dispatch systems, and AI-powered coal quality assessment.
• Connectivity Improvements: Investing in conveyor belts and rapid loading systems and collaborating with Indian Railways for dedicated freight corridors.
• Sustainability: Launching initiatives like "Coal Neer" (bottled water from mine water) and focusing on land reclamation.

Analysts Rating

25 analysts rating COALINDIA stock in the past 3 months. Most of them backed up the strong buy trend, and after taking into account other opinions, the overall rating was calculated as buy.

Valuation and Recommendation

Based on the Q4 results, Coal India's current standing, and future prospects, determining whether to buy, sell, or hold requires a comprehensive analysis:

• Positive Factors: The increase in net profit, consistent dividend payouts, and strategic initiatives for future growth are positive indicators.
• Concerns: Marginal revenue decline and pressure on realizations remain concerns.

Price Targets

• The average target is 486.62. The consensus estimate represents an upside of 26.96% from the last price of 383.30.
• COALINDIA price target is 456.00 INR with a max estimate of 539.00 INR and a min estimate of 362.00 INR.
• The Coal India Limited stock price prognosis for 2030-05-01 is 887.369 INR.

Disclaimer: This analysis is based on currently available information and analysts' estimates. Investment decisions should be made after consulting with a qualified financial advisor.