Coal India, the second-largest government-owned company, has witnessed a steep slump in its stock price
Coal India fell by 4% thereby, closing at Rs 285, the lowest price ever to be listed by the company on the Bombay Stock Exchange (BSE) on Thursday, July 11, 2013. On account of this low share price, Coal India is on a verge of another disinvestment. It has already been battling issues like slow coal production and a fall in the coal prices in the international market.
Coal India, the world’s largest coal miner have had a slow market performance in the last few weeks. The shares of the company have anticipated a downturn of 6.2% in last one week. The company missed its production estimates and is far behind its targets both for June and the first quarter of the current fiscal.
“The government’s intention to consider stake sale in Coal India has led to a correction in the stock price. Given the issue size, which could be as big as US$ 4 billion ( Rs 24,000 crore), we think the government may announce reform measures ahead of the stake sale,” said Pankaj Sharma, analyst at UBS.
However, the company’s production was not so appreciating over the years. The company has recorded a growth of 0.4% year-on-year (y-o-y) amounting to 102.8 MnT in the April-June quarter. The target to be achieved by the company was about 106.8 MnT in the same period. The subsidiaries of Cola India, Northern Coalfields (NCL) and Mahanadi Coalfields (MCL) have added to the production loss incurred by the company.
“Data suggests spot coal volumes were down by 7%, and prices in this segment were down 20% during April-May. We expect profits to fall 11% in the April to June quarter (Q1) despite a 6% price hike,” stated Manish Saxena, research analyst at Deutsche Bank.