Declining production may weigh heavily on Coal India stock price
Shares of Coal India Ltd fell by 3.4% on Thursday after the company reported a poor set of production numbers. Production shrank 23% in September, hampered by floods and rains. That has continued to keep a lid on its stock price, despite what appears to be an inexpensive valuation.
Overall, in the April-September 2019 period, Coal India’s production slumped 6% to 241 million tonnes. Analysts had pencilled in a target of 650-660 million tonnes for FY20. That means the coal miner needs to produce 410-420 million tonnes in the next six months to catch up, which clearly looks like a stretch.
Another worry for the company is the fall in coal prices in the international markets. The ICE Coal Futures price has dipped by 35% in the past one year to $62.5 per tonne.
