Shares of Coal India Ltd. snapped their seven-day gaining streak after the world's largest miner of the fossil fuel reported a marginal uptick in offtake in May even as economic activities resumed.
Shipments rose nearly 2% month-on-month in May, according to an exchange filing. Offtake, or despatches, recovered after declining for three months. The company's production also rose about 3% over the previous month at 41.43 million tonnes.
On a year-on-year basis, however, output and offtake fell 11% and 23%, respectively.
Coal India's offtake was mostly dragged by its larger subsidiaries. South Eastern Coalfields Ltd. reported the biggest slump in shipment of 24% over the last year. That's followed by a 20% decline in Mahanadi Coalfields Ltd.'s despatches. Northern Coalfields Ltd.'s offtake dropped 7.6% over last year.
Shares of Coal India dropped as much as 3.5% compared with a 1.37% gain in the Nifty 50 Index.
But concerns remain.
According to Edelweiss Research, high inventory of Coal India at about 77 million tonnes, sufficient stock at power plants and nil premium on e-auction sales that's likely to subdue earnings in the first half of the ongoing fiscal pose as near-tern challenges.
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