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ICICI Securities Report
A quick supply ramp-up in October 2021 led to a 11.8% YoY increase in Coal India Ltd.'s offtake volumes and 19.2% YoY in seven months-FY22, placing it favorably to clock all-time high offtake volumes in FY22E.
Key reasons behind the volume surge despite challenges arising from mine flooding in September-Oct-21, were:
increase in power demand;
critically low coal stocks at most power plants;
unprecedented power prices on exchanges,
all-time high global coal prices fueled by shortages in China, which forced Indian importers to look for domestic sources.
Offtake of more than 1.8 metric tonnes per day in Oct-21 is continuing at present too, as power plants restock to cater to the anticipated demand surge post Diwali.
Even assuming Coal India ends FY22E with 10% YoY growth, it will take the annual offtake volume to more than 635 million tonne, which is higher than consensus estimates.
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