Volume recovery may drive upgrades for Coal India

The introduction of "Singrauli Punarasthapan Charge" of ₹300 per tonne across all mines by Coal India's (CIL) subsidiary Northern Coalfields (NCL) from May 1 is expected to drive an estimated additional revenue of ₹3,880 crore.

- DEVANGSHU DATTA

The levy is 2.5 per cent of FY26 revenue and implies up to 8 per cent upgrade to FY26 earnings. It translated to an effective price increase of ₹50 per tonne (3.5 per cent) on overall fuel supply agreement (FSA) coal of 734 million tonnes estimated for FY26. NCL is the third-largest subsidiary with sales of 138 million tonnes in FY24, contributing 18 per cent of CIL's total sales volume. The cash inflow is likely to be used to fund upcoming land acquisition and rehabilitation programme at one of the mining areas in Singrauli. The estimated capex of ₹17,000 crore each in FY26 and FY27 incorporates upcoming capex on the Singrauli area.

CIL has faced headwinds from softening international thermal coal prices (and therefore pressure on e-auction premiums), market-share loss to captive production, weaker production growth and evacuation via rake movement. So this is a positive development.