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Motilal Oswal Report
Coal India Ltd. is in a sweet spot of coal demand now. Thermal coal is now one of the most sought after commodities in Europe. For now, Europe appears to have put its environment-related concerns on coal on the back burner. There are no more noises on greenhouse gas emissions from coal. Hence, we believe demand for thermal coal will remain strong over the next two-three years at least in the international market.
We do not expect a significant increase in domestic thermal coal production outside of Coal India, due to various issues including but not limited to:
first mile connectivity of mines to railway sidings,
limited rake availability,
overloaded road logistics from existing truck movement, and
delays in opening of newly auctioned mines on several grounds, among others.
These delays and strong demand for coal in India will divert more coal to the power sector with minimal amount of coal available for the non-regulatory sector (non-power sector).
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